14.1 Outlook for the global economy

Uncertainty lingers

There is currently great uncertainty about the future performance of the global economy. The financial sector has been badly shaken. Problems in the real-estate sector and the risk of some countries defaulting on their debts threaten to heighten the pressure once more in 2011. Furthermore, it is difficult to foresee the consequences that the main industrial countries' efforts to consolidate their public debt will have on the economy in the medium to long term. The central banks in the emerging markets are likely to switch to slightly more restrictive monetary policies in view of their extremely high growth levels, and also to slow down the pace of growth. Depending on the scale of these restrictions, the industrialised countries may also experience a downturn in their rate of economic growth. Additionally, the extremely expansionary monetary policies pursued by the central banks in the industrialised countries will result in higher inflation and also in higher commodity prices and interest rates over the medium term. Because the upturn in 2010 bypassed the labour market in many industrialised countries, the private sector has so far proved incapable of providing much stimulus.

Global economic growth continues at a slower pace

In this context, slightly more moderate expansion is forecast for 2011, following the sharp rise in economic output in 2010 in many industrialised nations. Among the euro-zone economies, Germany remains the engine of growth although it is only likely to achieve a growth rate of 2.5 per cent, which is below its 2010 rate. For the first time since the start of the recession, Spain's GDP will return to slight growth. Overall, the pace of growth in the euro zone will decelerate a little and economic output will rise by 1.6 percent. The pace of growth in the euro zone is likely to be the same in 2012, when it will again be 1.6 per cent.

In the USA, a number of the economic stimulus packages approved in 2008 and 2009 will come to an end in 2011 – an indication that the growth rate is likely to slow down. However, the US government has renewed or extended the term of temporary tax cuts for employees, lower social security contributions and special unemployment benefits. The USA has also created an incentive programme for corporate investment. These measures are equivalent to 2.5 per cent of the GDP forecast for 2011 and 2012. The Federal Reserve's expansionary monetary policy is likely to continue largely unchanged. However, not all of the measures that have been approved will take full effect, because there are still high levels of consumer debt as well as structural problems in the real-estate market. Given the current conditions, the US economy is likely to grow by 3.2 per cent in 2011. The rate of growth could even rise to 3.3 per cent in 2012.

The Chinese economy was the first to benefit from the recovery and it grew strongly in 2010. The monetary and financial policy measures introduced in China to prevent its economy overheating will take effect in 2011 and, as a result, growth will fall back to between 8.1 and 8.5 per cent in 2012, a lower level than in recent years. The slight slowdown in Chinese economic activity is highly likely to decrease demand for raw materials from Latin America. The cycle of inventory building has also largely come to an end, and support from this quarter is declining. As a result, the upturn in the Brazilian economy is expected to be slightly smaller than it was in 2010, and growth will fall to 4.5 per cent. The economy is likely to grow at a similar pace in 2012, fuelled by a more robust global economy and capital expenditure in conjunction with the 2014 FIFA World Cup and the 2016 Olympic Games.

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