Global Growth Numbers Predict Continued U.S. Slowdown
This morning the World Bank issued a press release based on data collected for the first two quarters of global economic activity this year. The multi-national institution commented on prevalent economic trends world-wide, in addition to highlighting individual regional concerns and citing different objectives for emerging markets vs. developed nations.
The biggest number of them all, global GDP, is projected to grow by 3.2% this year and 3.6% in 2012. This is according to Justin Lin, the World Bank’s Chief Economist and Senior Vice President for Development Economics, who also added, ” But further increases in already high oil and food prices could significantly curb economic growth and hurt the poor.”
The World Bank also projects major differences in growth rates of current “developing nations” (NYSE:EEM) as they begin to reach production capacities in the coming years, calling for a growth slowdown in such nations from an average of 7.1% this year to a more reasonable 6.3% over the next three years or so. These rates stand in stark contrast to high income nations (such as the United States) which will see growth slowdowns over the next two years, with projected GDP at just 2.6% by 2013.
In regional news, Japan (NYSE:EWJ) is expected to have no growth this year due to the catastrophic damage of the Earthquake and the aftereffects that rattled supply chains for a considerable period of time. The “Arab Spring” revolts this year did not usher in blossoming GDP figures, with involved nations expected to earn an average of 1.5% growth this year, (1% in Egypt).
Inflation in the developed world continues to be more of a concern than in The States, as countries in that sector averaged a 7% rate of inflation on the year, partially stymying rapid GDP growth. Higher food prices (NYSE:RJA) in 2011 (rising by 40% internationally) have caused a slew of troubles, particularly in the developing world. Andrew Burns, Manager of Global Macroeconomics at the World Bank commented, “Efforts must now focus on returning monetary policy to a more neutral stance and rebuilding the fiscal cushions that allowed developing countries to respond to the crisis with counter-cyclical policies.”
China (NYSE:FXI), India (NYSE:IFN), and the South/East Asian Region remained the world’s leading emerging market thus far into 2011, having posted regional GDP growth of 8.5%. Europe and Central Asia also posted surprisingly strong growth numbers, tallying 5.2% growth last year but expected to slow to a still robust 4.7% in 2011. Latin America (NYSE:ILF) and the Caribbean also came in very strong at 6% GDP growth in 2010 and a projected 4.5% boost this year.