Global Economy Reviews

02.09.2008 23:15 World Economy Review - August 2008

The latest from the International Monetary Fund (IMF) has downgraded its world growth forecast for this year to 3.9% from 4.1% issued just a month ago, and projects 2009 growth at 3.7%, down from 3.9%. The fund left unchanged its 2008 forecast for U.S. growth at 1.3%, but shaved its outlook for 2009 growth to 0.7% from 0.8%. It cut its forecast for Eurozone growth the most; expansion this year is expected at 1.4%, down from 1.7%, while 2009 growth is forecast at 0.9%, down from 1.2%.
The IMF has lowered its growth forecast for Britain to 1.4% in 2008, dropping to 1.1% in 2009. Over the next few quarters growth is expected to be 0.1% to 0.2% quarter-to-quarter, says Chopra. It would only take a small shock to push the country into a recession, as defined as two consecutive quarters of negative growth.
Japan`s real GDP is forecast to register a slower growth of 1.4% in 2008 (2007:2.1%) as the trade exposure to the US takes its toll. China, while a magnet for investment and retail sales, remains one of the largest sources of FDIs with its GDP growth surging to 11.4% in 2007. Despite a bleak global outlook and higher interest rates, China`s economy is still predicted to grow by about 10% in 2008 and 2009.
All in all, Latin America is expected to post GDP growth of 4.5 percent this year, the IMF predicts. Brazil, Latin America`s largest economy, will likely expand by 4.9 percent this year. Mexico, the second-largest economy, will grow by 2.4 percent. Argentina`s economy, the region`s third-largest, should end up the year with GDP growth of 7.0 percent. Venezuela`s economy, Latin America`s fourth-largest, is expected to increase by 5.8 percent this year.

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14.08.2008 16:55 World Economy Review - July 2008

Growth rates of global economy in the current year become the lowest for the last fifth anniversary, despite essential growth of the countries with developing economy (emerging markets), and the next 18 months will be for it "times of trouble", is spoken in the message extended on Wednesday on data of report Global Economic Outlook of international agency Fitch Ratings. To so-called emerging markets the countries BRICK (Brazil, Russia, India and China) concern, in particular. As it is marked, reduction of growth rates f economic passes against recession in housing and consumer sectors of the countries with the developed economy.
Under forecasts Fitch, gross national product growth in 2008 will make 1 % in the USA, 1,3 % - in Japan, 1,4 % - to the Great Britain and 1,7 % - in an eurozone. "The economic will worry a time of trouble the next 18 months. In the conditions of movement towards recession in economy of the USA in 2008 Fitch predicts growth at level of 1,3 % in the leading countries with the developed economy (which number includes the USA, the eurozone countries, Japan and the Great Britain), that does not exceed level of 2001", — is spoken in the message.
In Fitch notice, that 2001 was "especially weak year for the leading countries with the developed economy when the technological bubble has burst and stagnation in Japan was observed, and exclusively synchronous recession" became the culmination. Growth of world gross national product in the current year will be above level of 2001, including thanks to economic stability of Brazil observed recently, Russia, India, China and other countries with emerging markets. "At the same time, if to start with the market exchange rate, world economic growth will make 2,6 % that is the weakest significance for the last five years", — ascertain in Fitch.
The U.S. economy probably won`t return to steady, healthy growth for another year, according to economists` latest predictions published in the Blue Chip Economic Indicators. The median forecast of 50 economists for this year`s gross domestic product growth remained at 1.6% in the August edition of Blue Chip published on Sunday. For next year, the median estimate fell to 1.5% from 1.7%.
The economists surveyed by Blue Chip see growth at 1.2% in the third quarter, 0.3% in the fourth quarter, 1.1% in the first quarter of 2009 and 2% in the second quarter. It isn`t until the third quarter of 2009 that GDP growth would rebound to close to its potential of 2.5% or so.

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01.07.2008 20:31 World Economy Review - June 2008

The World Bank cut its 2008 global growth forecast to 2.7%, citing rising food and oil prices. In January 2008, the bank predicted that global growth would total 3.3% for the year. The global economy grew 3.7% in 2007. Further, the bank now sees 2008 emerging market GDP growth totaling 6.5%, down from its earlier 7.8% forecast. The bank called high energy and food prices "a major worry" and added that they "are the dominant force behind increased inflation across developing countries".
Also, the World Bank expects the U.S. economy to grow 1.1% in 2008, a downward revision from the bank`s earlier 1.9% forecast. Meanwhile, the bank expects Europe`s 15-nation euro zone to grow 1.7%, down from the earlier estimate of 2.8%. Japan`s economy is expected to grow 1.4%, down from the earlier estimate of 2%.
Further, the World Bank also sees a considerable slowdown in China`s economy in 2008, but GDP growth is still expected to remain very strong. The bank now sees China`s GDP increasing 9.4%, down from the earlier 11.9% estimate. The World Bank`s revised GDP growth forecasts for 2008 and 2009 by region are: Euro zone, 1.7% and 1.5%; Europe and Central Asia, 5.8% and 5.4%; South Asia, 6.6% and 7.2%; Latin America, 4.5% and 4.3%; Middle East and North Africa, 5.5% and 5.3%; and Sub-Saharan Africa, 6.3% and 5.6%.
Meanwhile, The global economy would collapse if oil hit $200 a barrel, said the top energy analyst at Germany`s largest bank. "Two-hundred dollar oil would break the back of the global economy", Deutsche Bank AG`s Chief Energy Economist Adam Sieminski said in an interview today in Tokyo. "Next step after $200 would be global recession and bad news for everybody".
Sieminski`s comments come after Goldman Sachs Group Inc. forecast oil may rise to between $150 and $200 within two years as supply growth, especially from producers outside the Organization of Petroleum Exporting Countries, fails to keep pace with demand.

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05.06.2008 21:36 World Economy Review - May 2008

A newly released U.N. Economic Survey forecasts a global downturn but does not predict the gloom and doom scenario which is being bandied about by so many pundits and politicians. While world economic growth, which registered 3.8 percent in 2007, is expected to "decline markedly" to 1.8 and 2.1 percent for 2008 and 2009, respectively, the prospects are not all dim. Naturally, the big question hinges on the economic performance of the United States.
The report World Economic Situation and Prospects 2008 states that the U.S.`s 2007 GDP growth rate of 2.2 percent will certainly decline by about 0.2 percent this year due to the combination of the housing crisis, energy prices and slumping consumer confidence. Japan, another global economic pillar, saw expansion of 2.1 percent in 2007, but is expected to see a slowdown in 2008. Western Europe, which witnessed a strong 2.6 percent GDP growth last year, could see a slowdown to about 1 percent this year. Uncertainty clouds the horizons.
Beyond the obvious, there`s much good news and indeed impressive results which are generally not being seen. For example, "defying global storms, German gross domestic product leapt by 1.5 percent in the first quarter, the fastest quarterly rate in 12 years," according to the Financial Times. Likewise, the French economy grew unexpectedly by 0.6 percent in the same period. "A dramatic German growth rate and better than expected economic performance from France, powered a eurozone rebound at the start of this year, in contrast to the sharp slowdown in the U.S." the paper adds. And don`t forget that with conservative and market-oriented governments, both Germany and France are re-discovering economic prosperity and trimming, and, if ever so slowly, the bloated social welfare state.
The World Economic Situation adds, that among new members of the European Union, such as Poland, Slovakia and Slovenia, performance last year "was robust with a growth average averaging 6 percent." This year growth is only expected to slip by one percent.
East Asia without question is another star player with GDP growth in the region reaching an impressive 8.8 percent in 2007. This year will see a moderate slowdown given a deceleration of exports. Indeed, the growth in world trade decreased 4.7 percent in early 2008, down from 7.2 percent last year due to weak import demand from the U.S. The report adds, "as a result, dynamic exporters of manufactured goods, such as China, reported significant deceleration of export volumes." Nonetheless, the trade boom in recent years has filled the coffers in mainland China where the reserves reached a staggering US$1.5 trillion by the end of 2007.

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02.05.2008 21:46 World Economy Review - April 2008

The International Monetary Fund cut its 2008 outlook for world economic growth for the second time this year, in a move that acknowledged housing and credit problems in the United States were exacting a heavy toll on the global economy. The IMF said it expects the pace of global growth to slow to 3.7 percent this year, down from its January forecast of 4.1 percent and lower still from the 4.8 percent rate it predicted in October last year. The latest revision puts world growth at its lowest since 2002, when growth was 3.1 percent, according to IMF data. "I can confirm the IMF`s current aggregate world growth forecast for 2008 is 3.7 percent," an IMF spokesman said, confirming reports about the IMF`s World Economic Outlook due on April 9. Earlier, IMF Chief Economist Simon Johnson said the U.S. economy has come to "a virtual standstill" and will remain weak in coming quarters owing to deeper problems in housing and credit markets. Still, Johnson avoided saying the United States was in recession. Media have reported that the IMF growth outlook will put U.S. economic growth for 2008 at 0.5 percent from a previous forecast of 1.5 percent.
Growth in Europe is expected to slow significantly in 2008-09, reflecting spillovers from weaker global growth, rising commodity prices and the strains in financial markets. Europe`s economy is resilient but not immune to global economic threats, the IMF said as it defended its recent gloomy outlook on the region. According to the IMF, GDP growth in the Eurozone will slow to 1.4% this year and 1.2% in 2009. In 2007, growth was 2.6%. The projections in the Regional Economic Outlook have not changed from those in the World Economic Outlook released on April 9th. Michael Deppler, the IMF`s European director, who is about to retire, said this represented a "middle-of-the-road view" of the likely effects of economic shocks such as the global financial crisis, a looming US recession and the euro`s appreciation to record levels.
Economic growth in Russia and emerging European economies will likely cool this year as financial market turmoil curbs access to credit and demand for oil, the International Monetary Fund said. Russia, which logged growth of 8.1 percent last year, will see growth moderate to 6.8 percent this year and then 6.3 percent next year. Growth in the Commonwealth of Independent States was expected to ease to 7.0 percent this year from 8.5 percent in 2007. Risks to the outlook were tilted to the downside.

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