Saturday, June 9, 2012

World Economic outlook for 2012, between stagnation and recession

The economic outlook for the global economy in 2012 is very uncertain, due to recession in Europe, slowdown in china’s economy and in other emerging- market economies. The economic recession in Europe keeps worsening and the debt problems of countries such as Greece, Italy, Spain and Portugal can pull the whole Euro-zone into one of the major economic turmoil of the last decades.
Moreover the possibility that Greece leaves the Euro-zone could drag down the major economies of Europe such as Germany and France, therefore the GDP growth projection is going to be negative for 2012 (-0.3%)

GDP europe
The projected GDP growth of US will be around 2% for 2012, the country is resisting to the euro crisis, and unemployment rate is diminishing, but the country has to find a solution concerning the household debt in order to strengthen growth in the future.


The GDP growth perspective in Asia for the near future is moderate due to the slowdown of exports toward the Euro-zone but the effects of the global recession were quite limited on Asia, with the help of  rising domestic factors which maintain the economic health.
In India the lack of business sentiment has lead to a slowdown in investments, India’s growth is expected to slowdown and to be 7% for 2012 due to some cyclical effect related to higher interest rate and lower demand.
GDP asia

On the other hand Japan is slowly recovering from the previous natural and nuclear disasters, indeed consumption starts to grow again and the automotive sector is doing pretty well despite a very strong Yen which makes it difficult to increase its exports, and the country’s growth for 2012 is projected to be 2% which shows Japan’s ability to recover rapidly from the past disaster
China despite a slowdown in its economy is still doing well, the growth is expected to be around 8% for the next year with a steady private consumption and investment remained strong due to rising household income and comfortable profits from companies.
Korea is suffering a bit from this global uncertainty, but an increase in construction is starting despite a stagnation of its private consumption and investments.

Concerning the Asean region, the euro crisis has a deep impact on the external demand, but the very high domestic demand especially in Indonesia and Malaysia is balancing the situation, indeed GDP growth in Indonesia is projected to be a comfortable 6.1% in 2012.

In the Newly industrialized economies, Australia, and New Zealand, if the crisis in the Euro-zone and US persist it could be a major setback for them as their banking system rely heavily on  foreign dollar funding and a liquidity problem could appear if the situation worsen.

Vietnam has a projected GDP growth of 5.6% for 2012, indeed despite the global recession, there is still a steady external demand in Vietnam as it is now seen as a cheaper alternative for manufacturing due to the increasing labor cost in China


Ira Morse said...

I can see what Greece is trying to pull here. Greece wants to show the Euro Zone that they can form a government of their own. I think this is a goodbye for Greece.

By: exchange rates comparison

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