Global growth expected to slow

Global growth will fall to 3.4% in 2011, from almost 4% in 2010, according to a report released by the Conference Board of Canada.

The report, World Outlook: Global Economic Trends and Prospects: Winter 2011, identifies persistent economic woes in Europe as a key factor in the decline.

Real GDP growth of 1.4% is expected in the EU for 2011, down from last year’s already meager gain of 1.6%.

The Asia-Pacific region will remain at the head of the pack in economic growth, the report says. Real GDP is expected to rise by 5.1% this year. China and India will continue to enjoy strong domestic demand and industrial production, but higher interest rates will slow China’s GDP growth to 9.1% this year, from 10.1% in 2010. India’s growth in 2011 is expected to be about 8.5%, the same as last year.

The outlier in the Asia-Pacific region is Japan. Weaker household spending is expected as fiscal stimulus winds down, and near-term increases in interest rates could follow from investor worries about Japan’s extremely high debt levels. Japanese real GDP growth is expected to slow to 1.1% this year, from 3.5% in 2010.

Weaker global trade and a leveling off of some commodity prices is expected to slow growth in Latin America to 4% this year. Brazil, the region’s largest economy, will increase interest rates to contain inflation, with the result that real GDP growth will slow to 4.4%, down from 7.5% in 2010.

The current domestic unrest in Egypt and other Middle Eastern countries is not expected to affect the global outlook, unless it leads to a considerable and sustained increase in oil prices.

Source: www.benefitscanada.com