Td bank report global growth outlook bracing for impact economics assignment


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TD Bank report- Global growth outlook: Bracing for Impact Economics Assignment

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Td bank report global growth outlook bracing for impact economics assignment

  1. 1. Economics Assignment | Expertsmind.comComparative report of studies by TD Bank and Scotia BankTD Bank report- Global growth outlook: Bracing for Impact Economics AssignmentScotia Bank report- Global Forecast update.According to both the reports i.e. TD Economics and Scotia Economics a slowing pace ofgrowth in advanced nations especially U.S. and Euro zone have knock on effects on othercountries of the world. However, the Scotia economics report has added further to it thatbecause of sharp slide in consumer and investor confidence and increasing debt burden therisk of further economic setback has increased.TD economics has mentioned explicitly that odds of Greece defaulting over the next 12months are very high. If it happens EU banking system would be in shambles.The growth forecast by both the reports shows different figures. According to TD Economicsestimates growth will be 3.2% for both 2011 and 2012 while according to Scotia economicsexpected global growth rate is 3.9 % for this year and 4.2 % for the year 2012. This impliesthat according to Scotia economics there are indications of better economic performance inthe next year. As per Scotia economics report, the momentum of growth will not fallbecause of continuing gains in business profitability and investments, ongoing increases inemerging nation’s demand, and generally accommodative monetary policies and creditconditions.Country wise comparison of growth rates of real GDP given by the two reports:JAPANScotia economics emphasised mainly on the problems of the country such as –manufacturing supply chain disruptions, escalating geopolitical political problems aroundthe world, sharply higher energy and other key commodity prices and dislocations triggeredby bad weather and natural disasters. But TD economics report highlighted the positiveaspects that economy is witnessing such as improvement in industrial production,
  2. 2. acceleration in economic activity, improvement in exports and private consumption andreduction in import prices.Growth rate of real GDP in Japan:Year TD Economics Scotia Economics2011 -0.6 % 0.3 %2012 3.1 % 3.5 %CanadaAccording to TD economics report confidence will improve by 2012 and domestic spendingand business investment will increase.Year TD Economics Scotia Economics2011 2.2 % 2.2%2012 1.9 % 2.1 %Both reports indicate expectations of lower real GDP next year as the export sectorperformance will deteriorate due to weak U.S. demand and a lofty Canadian dollar.U.S.According to TD economics there are persistent risk of recession. The ability of eithermonetary or fiscal policy to push the U.S. economy onto a higher growth trajectory hasweakened. It is expected that recently proposed America jobs act and extension of payrolltax cuts will lead to better economic results in 2012.Real GDP GrowthYear TD Economics Scotia Economics2011 1.6 % 1.7%2012 1.7% 2.1 %China
  3. 3. According to TD economics report the growth rate will decline owing to increase in interestrates and reserve requirement ratio. Another reason is slowdown in US and Europeaneconomies. In response to high inflation, government will be cautious in raising aggregatedemand. Thus, the growth rate is expected to decline in 2012.Year TD Economics Scotia Economics2011 9.1 % 9.3 %2012 8.2 % 9.5 %MexicoReal GDP Growth rateYear TD Economics Scotia Economics2011 3.6 % 3.7 %2012 3.2 % 3.5 %According to Scotia Economics, weaker trajectory in US growth and poor economicperformance the expected growth rate is revised down to 3.7% from 3.9%United Kingdom.Year TD Economics Scotia Economics2011 1.1 % 1.2 %2012 1.4 % 1.5 %As per both the reports the forecast for real GDP growth rates shows positive results by anincrease in 0.3% next year.Euro zoneReal GDP Growth rateYear TD Economics Scotia Economics2011 1.7 % 1.7 %
  4. 4. 2012 1.0 % 1.4 %According to TD economics this slowdown is largely attributed to a slowdown in Germanycausing decline in private consumption, fixed investment and exports. Along with this arecent escalation of the European sovereign debt crises will curtail consumer and businessconfidence which will further reduce aggregate demand.Comparison of estimates for consumer price indexCountry TD economics estimates Scotia economics estimates 2011 2012 2011 2012US 3.1 % 2.1 % 2.8% 1.9%Japan 0.1 % 0.2 % 1.1 % 1.3 %UK 4.3 % 2.6 % 4.4 % 2.1 %Canada 2.7 % 1.7 % 2.7 % 1.9 %Euro Zone 2.4 % 2.0 % 2.5 % 2.0 %As per these estimates the rates of inflation are different in two reports, however in bothreports it is expected that in all abovementioned countries except Japan inflation willdecline in 2012.Comparison of TD Bank and Scotia Bank reports on the basis of unemployment rateCountry TD Economics Scotia Economics 2011 2012 2011 2012US 7.5 % 7.4 % 7.5 % 7.3 %Canada 9.1 % 9.0 % 9.0 % 8.8 %Data shows there is not much difference in the estimates of unemployment rate for US andCanada in these reports and both indicate a decline in the rate of unemployment in 2012owing to expected better economic performance of the world as a whole.Conclusion
  5. 5. As per both reports the global economy lost momentum in recent months due to USeconomy slowdown and European debt crises and since the world is interconnected bytrade and capital market linkages these have repercussions on other advanced andemerging countries of the world. However, both Scotia bank and TD bank believe that theworld economy soon will gain momentum and it will move on the path of higher growthtrajectory. TD economics lays much emphasis on economic situation of Greece for therecovery of European Union from the sovereign debt crises.