Global economic forecast December 14th 2010
<ul><li>The recovery is softening, with the weakness of private-sector jobs creation giving particular cause for concern <...
<ul><li>Europe’s economy is recovering but the fiscal crisis has raised risks </li></ul><ul><li>The economy is burdened wi...
<ul><li>Export performance  in Japan will deteriorate in 2011, reflecting a deceleration of Chinese growth and continued y...
<ul><li>Chinese growth has been supported by massive stimulus, but this has aggravated existing imbalances </li></ul><ul><...
<ul><li>Oil consumption will continue to grow in 2011, led by the developing world and the US. Consumption will continue t...
<ul><li>Fiscal stimulus in China and restocking in the OECD drove demand in 2010, but will fade in 2011 </li></ul><ul><li>...
<ul><li>The Federal Reserve will not raise its policy rate until the third quarter of 2012 </li></ul><ul><li>The ECB has s...
<ul><li>Expectations of earlier rate hikes in the US and lingering concerns about the fragility of the euro zone will supp...
16 16 16 15 10 -  The global economy experiences a double-dip recession -  Developed economies fall into a deflationary sp...
10 10 9 9 8 +  Confidence revives, prompting a stronger rebound in demand +  Emerging-market inflation surges -  Economic ...
 
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Global Forecasting December 2010

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Here is the Global Forecasting for December 2010

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Global Forecasting December 2010

  1. 1. Global economic forecast December 14th 2010
  2. 2. <ul><li>The recovery is softening, with the weakness of private-sector jobs creation giving particular cause for concern </li></ul><ul><li>But a new round of fiscal stimulus will support growth in 2011 and guard against another recession. </li></ul><ul><li>Inflationary pressures remain very weak—core consumer price inflation below 1% in year-on-year terms </li></ul><ul><li>A large stock of houses on the market or coming in the near future will exert renewed downward pressure on prices </li></ul>
  3. 3. <ul><li>Europe’s economy is recovering but the fiscal crisis has raised risks </li></ul><ul><li>The economy is burdened with spare capacity and urgent need for fiscal consolidation </li></ul><ul><li>Unemployment has risen only moderately owing to wage subsidies, but employment recovery will be slow </li></ul><ul><li>Greece is likely to need a re-structuring of its government debt despite a massive rescue package, and Ireland could face the same fate </li></ul>
  4. 4. <ul><li>Export performance in Japan will deteriorate in 2011, reflecting a deceleration of Chinese growth and continued yen strength </li></ul><ul><li>The urgent need for fiscal consolidation greatly limits room for further fiscal stimulus beyond measures already approved </li></ul><ul><li>Weak domestic demand is putting downward pressure on Japanese prices again, so that deflation continues </li></ul>
  5. 5. <ul><li>Chinese growth has been supported by massive stimulus, but this has aggravated existing imbalances </li></ul><ul><li>India is growing strongly on the back of robust domestic demand. However, fiscal pressures remain and will act as a constraint on potential growth </li></ul><ul><li>Brazil’s performance has been driven by demand for commodities from China and by solid domestic consumption </li></ul><ul><li>Russia’s recovery is supported by the rise in oil prices over the past year </li></ul>
  6. 6. <ul><li>Oil consumption will continue to grow in 2011, led by the developing world and the US. Consumption will continue to fall in the EU </li></ul><ul><li>Output restraint and significant spare capacity in OPEC producers suggests ample supply. Any escalation in geopolitical tensions could disrupt our supply forecasts </li></ul><ul><li>Loose global monetary conditions and investors’ search for return will support prices </li></ul>
  7. 7. <ul><li>Fiscal stimulus in China and restocking in the OECD drove demand in 2010, but will fade in 2011 </li></ul><ul><li>Rising emerging market incomes and urbanisation will underpin medium-term demand growth </li></ul><ul><li>Years of underinvestment, particularly in agriculture, will push up prices </li></ul><ul><li>Gold prices have been strong, fuelled by vibrant investor demand, while fundamentals remain weak. Persistent economic uncertainty will support prices in 2011 </li></ul>
  8. 8. <ul><li>The Federal Reserve will not raise its policy rate until the third quarter of 2012 </li></ul><ul><li>The ECB has stepped up purchases of bonds of struggling governments; the central bank is also now unlikely to raise rates until the third quarter of 2012 </li></ul><ul><li>Japanese policy rates will be held at emergency levels until late 2012 </li></ul><ul><li>The European fiscal crisis raises new concerns for banking sector stability </li></ul>
  9. 9. <ul><li>Expectations of earlier rate hikes in the US and lingering concerns about the fragility of the euro zone will support the US$ against the euro over the longer term </li></ul><ul><li>The yen will remain firm against the US$, reflecting heightened risk perceptions and Japanese institutional investors’ home bias </li></ul><ul><li>Emerging market currencies will continue to be supported by wide interest rate and growth differentials with OECD economies </li></ul>
  10. 10. 16 16 16 15 10 - The global economy experiences a double-dip recession - Developed economies fall into a deflationary spiral - New asset bubbles burst, creating renewed financial turbulence - Tensions over currency manipulation lead to a rise in protectionism - A number of developed sovereigns default as public debt surges
  11. 11. 10 10 9 9 8 + Confidence revives, prompting a stronger rebound in demand + Emerging-market inflation surges - Economic upheaval leads to widespread social and political unrest - The euro zone breaks up - The Chinese economy crashes

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