Latest GDP forecasts- World Economic Outlook April 2012

The International Monetary Fund (IMF) released its latest half-yearly global economic forecasts in their World Economic Outlook (WEO) report yesterday.

When I reported the World Economic Outlook in September last year, the tone and language used to describe the global economy was one of major worry with dangers and risks lurking. After six months, IMF has turned more positive but still cautious.

“The threat of a sharp global slowdown eased with improved activity in the United States and better policies in the euro area. Weak recovery will likely resume in the major advanced economies, and activity will remain relatively solid in most emerging and developing economies.” (Source: WEO April 2012)

The world output is now forecast to grow at 3.5 per cent for 2012 and at 4.1 per cent for 2013.

The global economies are now made up of two halves, one with slow growth and the other with higher growth. The advanced economies is forecast to expand by only about 1.4 per cent in 2012 and by 2.0 per cent in 2013. In contrast, the emerging and developing economies are projected to grow at a faster pace at 5.7 per cent in 2012 and 6.0 per cent in 2013.

The following provides the GDP growth forecast for some key countries.

GDP Forecast for 2012

United States +2.1%
Japan +2.0%
UK +0.8%
Canada +2.1%
Australia +3.0%
Switzerland +0.8%

Euro Area -0.3 %
– Germany +0.6%
– France +0.5%
– Italy -1.9%
– Spain -1.8%

China +8.2%
India +6.9%

Newly industrialised Asian economies +3.4% (includes Korea, Taiwan, Hong Kong and Singapore)

Middle East and North Africa (MENA)            +4.2%

Almost all economies are expected to expand this year with the exception of some Euro area countries. The countries in Euro area, such as Spain (-1.8%), Italy (-1.9%), Greece (-4.7%), Portugal (-3.3%) are expected to contract due their severe austerity fiscal measures to address their government soverign debt problems.

China is expected to slow from 9.2 per cent growth in 2011 to 8.2 per cent growth for this year. India as well is expected to slow with GDP growth of 7.2 per cent growth in 2011 to 6.9 per cent growth for this year.

Performance of global economies for this year is forecast (3.5 per cent) to be lower than last year’s 3.9 per cent. The slower China economy for this year, which is the world’s second largest economy, has indeed impacted the global economic forecast. What we faced in 2011 would be dragged on for another year. These include, among others, poor investment valuation, slow wage growth, weak job security, and higher inflation for some countries like Singapore.

Copyright © 2012, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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