Europe Economy

We Are in a Semi-Depression: Nightingale

The surprise rise in German and French gross domestic product does not mean the world recession is over, and central banks are likely to make mistakes that would bring about a second recession, Roger Nightingale, strategist at Pointon York, told CNBC Friday.

"It's been very rare for them not to make policy mistakes in the past," Nightingale said. "You are in a semi-depressionary situation all around the world. I would think that in fact a central banker raising rates now would make a policy mistake."

Australia's central banker sent the Australian dollar to an 11-month high Friday after saying the country's interest rates will be noticeably higher than the current 3 percent rate, while analysts have said the European Central Bank may start thinking of tightening after the good GDP numbers from Germany and France.

We Are in a Semi-Depression: Economist
We Are in a Semi-Depression: Economist

As for the risk of a second leg in the recession, the run down in inventories has stopped, but the problem is that retail sales have not picked up and investors need to be cautious in the second half of the year, according to Nightingale.

"I think it's almost certain. I'd be very surprised indeed if the slight improvement that we've seen in GDP were not to fall in the latter part this year early next year," he said.

The latest data out of the world's biggest economy did little to dispel fears that a recovery is still far away.

Retail sales slipped by 0.1 percent in July after rising 0.8 percent in June in the US, while new jobless claims, which were expected to fall, actually rose by 4,000 last week to 558,000.