Transcript Global forecasting service Economic forecast summary - March 2012 Master Template www.gfs.eiu.com The tone of recent data has been fairly strong.

Global forecasting service
Economic forecast summary - March 2012
Master Template
1
www.gfs.eiu.com
The tone of recent data has been fairly
strong. economy has been creating more
jobs in recent months. We are
maintaining our 2012 GDP growth at
1.8%. But if payroll tax cuts and
unemployment benefits are extended
beyond the end of February, we may
revise upward our growth forecast.
The Fed has signalled that it will keep
interest rates very low through to end of
2014, but deleveraging will constrain
spending. A further round of quantitative
easing is possible if the threats of
recession and deflation re-emerge.
A large overhang of houses will prevent
a strong recovery in the housing market.
The injection of liquidity by the ECB into
euro zone banking system has eased
funding pressures on banks and
sovereigns, notably Italy and Spain.
In Greece a deep recession continues
to foment social and industrial unrest.
Talks on a restructuring of debt owed to
private creditors are proving difficult.
Greece has yet to satisfy the conditions
set by the EU and IMF for a second,
€130bn bail-out. Unless this deal is
signed, Greece will default on a
€14.5bn bond repayment in March.
We expect the euro zone economy to
contract by 0.7% in 2012.
The March 2011 earthquake and tsunami
had a severe impact on power supplies
and supply chains. Industrial production
is now recovering as infrastructure is
rebuilt. The strong yen is proving a
headwind for exporters.
Strong GDP growth in the third quarter
was not sustained in the fourth quarter,
when the economy contracted by 2.3%
q-on-q at an annualised rate.
Our forecast of GDP growth of 2% in
2012 is subject to downside risks given
the loss of momentum in late 2011. From
2013 we expect the economy to grow at
a rate of just above 1%.
In response to fears of an economic
downturn, a number of EM central
banks have cut interest rates or at
least postponed monetary tightening.
EM currencies and asset markets
have rebounded since the start of the
year as risk appetite has recovered.
EMs lost momentum during 2011 as
developed markets struggled. We
forecast a soft landing in China,
despite problems in the housing
market.
Growth in 2012 will be constrained by
sluggish OECD demand. EMs will still
comfortably outperform their peers in
the developed world in 2012-16.
Oil consumption growth will be
constrained in 2012 by the weak
OECD economic outlook. It will
average nearly 2% year on year in
2013-16, led by rising demand in the
developing world.
The prospect of a resumption of
Libyan output in the next 1-2 years
has improved the supply outlook.
Geopolitical risk remains high,
however.
Prices will average around US$110
as supply concerns offset the
negative impact of weaker demand.
Consumption growth is expected to
slow in 2012, constrained by weak EU
and growth and somewhat slower
growth in the developing world.
However, rising emerging market
incomes and urbanisation will underpin
medium-term demand growth.
Years of underinvestment, particularly
in agriculture, will support prices.
Nominal prices will remain historically
high in 2012-16, but prices will ease
back in real terms.
Faced with persistently high
unemployment, the Federal Reserve
will keep its policy rate at
exceptionally low levels until late
2014. Another round of quantitative
easing (QE) is possible.
The ECB cut rates twice in late 2011,
reversing the two rate rises earlier in
the year. In 2012 we expect the ECB
to cut its policy rate from 1% to
0.75%.
The ECB’s injection of large amounts
of liquidity into the euro zone financial
system has alleviated funding
stresses.
As funding stresses on euro zone
banks and sovereigns have eased, the
euro has rebounded. Having bounced
from a recent low of US$1.26, the
single currency appears to be
establishing a new trading range above
US$1.30:€.
The yen has weakened as risk appetite
has recovered. But it is likely to remain
well supported until the global
economic outlook becomes clearer.
EM currencies have rebounded. Over
the medium term they will be supported
by positive growth and interest rate
differentials with OECD economies.
- The global economy falls into recession
20
- Oil prices remain at extremely high levels
16
+ Unprecedented policy response after Greek exit prevents contagion
16
- The euro zone breaks up
15
- The Chinese economy crashes
15
- Resumption of monetary stimulus leads to new asset bubbles
12
- Tensions over currency manipulation lead to protectionism
12
- US dollar crashes
10
- Economic upheaval leads to widespread social and political unrest
9
+ Stronger than anticipated US growth boosts the global economy
8
Access analysis on over 200 countries worldwide with the Economist Intelligence
The analysis and content in our reports is derived from our extensive economic, financial, political and business risk
analysis of over 203 countries worldwide.
You may gain access to this information by signing up, free of charge, at www.eiu.com
Click on the country name to go straight to the latest analysis of that country:
Further reports are available from Economist Intelligence Unit and can be downloaded at www.eiu.com
G8 Countries
*
Canada
* France
* Germany
* Italy
* Japan
* Russia
* United Kingdom
* United States of
America
* Russia
* India
* China
* Vietnam
* Egypt
* Turkey
* South Africa
BRIC Countries
* Brazil
CIVETS Countries
* Colombia
* Indonesia
Or view the list of all the countries.
Should you wish to speak to a sales representative please telephone us:
Americas: +1 212 698 9717
Asia: +852 2585 3888
Europe, Middle East & Africa: +44 (0)20 7576 8181
Master Template
13
www.gfs.eiu.com
Access analysis and forecasting of major industries with the Economist Intelligen
In addition to the extensive country coverage the Economist Intelligence Unit provides each month industry and
commodities information is also available.
The key industry sectors we cover are listed below with links to more information on each of them.
Automotive
Analysis and five-year forecast for the automotive industry throughout the world providing detail on a country by country
basis
Commodities
This service offers analysis for 25 leading commodities. It delivers price forecasts for the next two years with forecasts of
factors influencing prices such as production, consumption and stock levels. Analysis and forecasts are split by the two main
commodity types: “Industrial raw materials” and “Food, feedstuffs and beverages”.
Consumer goods
Analysis and five-year forecast for the consumer goods and retail industry throughout the world providing detail on a country
by country basis
Energy
Analysis and five-year forecast for the energy industries throughout the world providing detail on a country by country basis
Financial services
Analysis and five-year forecast for the financial services industry throughout the world providing detail on a country by
country basis
Healthcare
Analysis and five-year forecast for the healthcare industry throughout the world providing detail on a country by country
basis
Technology
Master
Template
Analysis and five-year forecast for the technology industry
throughout
the world providing detail on a country bywww.gfs.eiu.com
country 14
basis
Media Enquiries for the Economist Intelligence Unit
Europe, Middle East & Africa
Asia
Grayling PR
Jennifer Cole
Tel: + 44 (0)20 7592 7933
Sophie Kriefman
Tel: +44 (0)20 7592 7924
Ravi Sunnak
Tel : +44 (0)207 592 7927
Mobile: + 44 (0)7515 974 786
Email: [email protected]
The Consultancy
Tom Engel
+852 3114 6337 / +852 9577 7106
[email protected]
Ian Fok
+852 3114 6335 / +852 9348 4484
[email protected]
Rhonda Taylor
+852 3114 6335
[email protected]
Americas
Australia and New Zealand
Grayling New York
Ivette Almeida
Tel: +(1) 917-302-9946
[email protected]
Katarina Wenk-Bodenmiller
Tel: +(1) 646-284-9417
[email protected]
Cape Public Relations
Telephone: (02) 8218 2190
Sara Crowe
M: 0437 161916
[email protected]
Luke Roberts
M: 0422 855 930
[email protected]
Master Template
15
www.gfs.eiu.com