Global economy not yet out of the woods

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A customer looks at luxury products at a Kenneth Cole store in New York.

Chinese economists on Tuesday said the world economy is not out of the woods yet, despite the recent bailout package for Greece and the surging capital markets.

"The Greek rescue package is definitely good news. It will help stabilize the eurozone economy and somewhat reduce the hurdles for a global economic recovery," said Zhuang Jian, a senior economist with the Asia Development Bank.

Eurozone members and the International Monetary Fund (IMF) agreed on a 110 billion euro ($146 billion) financing package for the embattled Greek economy over the weekend, while the German government cleared a $30 billion contribution on Monday.

"The bailout from the IMF and EU will certainly help Greece avoid a default crisis at least for now, and reduce the near-term risk of a contagion-induced crisis in Europe. It will also indirectly reduce the risk of a double-dip in global recovery," said Wang Tao, chief economist with UBS in China.

Wang said there are still difficulties in implementing policies and the market needs more definite answers that Greece can continue to keep its house in order.

Zuo Xiaolei, chief economist with China Galaxy Securities, however, said the bailout was disappointing as rich countries like Greece "ate its own corn on the blade" and now want others to help.

Economists also said that while the US economy has started to show signs of a recovery, there are still risks of a double-dip recession.

Despite the recent Wall Street gains, the capital markets are yet to indicate any real economic confidence, said Zuo.

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