THE GLOBAL ECONOMIC ENVIRONMENT
In 2012, economic performance continued to vary greatly around the world, with stabilizing but still positive performance by some countries in the Asia Pacific and Latin America regions, such as Japan and Brazil, and slow but steady progress in North America. The debt crisis clearly makes Europe the most volatile region of the world at the moment, and according to the United Nations (UN) and many others this situation presents the biggest threat to the global economy. It is widely agreed that further deterioration of those conditions would cause developed economies to contract further, which would risk spreading to developing economies and creating turmoil worldwide. The uncertain economic and political outlook in the US is an additional key factor contributing to a lack of business and consumer confidence in many parts of the world.
The Economist Intelligence Unit’s (EIU) Global Outlook Summary published in June noted that the global economy remained in precarious shape. The EIU expects global GDP (Gross Domestic Product) growth to slow to 3.2 percent in 2012 as a direct result of the problems in Europe, down from 3.7 percent in 2011 and 5.2 percent in 2010 (a year when GDP expansion was fuelled by strong government anti-recession measures). Growth was notably slower in the second quarter of 2012 than the first. The Euro area’s economy was forecast by the EIU to fall 0.7 percent in 2012, and to grow only 0.3 percent in 2013. But with each passing month of 2012, more cautious estimates of growth, particularly in Europe, are emerging.
The UN slightly revised down its own forecast for world GDP growth to 2.5 percent in 2012 (down from initial projections of 2.6 percent) and to 3.1 percent in 2013 (down from initial projections of 3.2 percent). World trade growth, according to the UN, is also expected to slow to 4.1 percent for the full year 2012, down from 6.6 percent in 2011.
According to the Organisation for Economic Cooperation and Development (OECD), the global economy has weakened since spring, led by developments in the euro area where recession is again taking hold in some countries. Economies both inside and outside the OECD area have been adversely affected by the euro area. Ongoing balance-sheet adjustments and renewed declines in consumer confidence have kept household demand soft in many countries. In the euro area, weakness in the periphery risks spreading to parts of the core.
Perhaps the most worrying news of all is that even some of the vibrant BRICS economies, which have driven growth in recent years, are starting to weaken as fears about the state of the euro spread and global demand falls. For example, in China, the world’s second-largest economy after the US, GDP data for 2012 confirm that that country’s days of double-digit economic expansion have halted. The Chinese economy expanded by 7.4 percent in the third quarter of 2012, compared with a year earlier - its slowest pace of growth since early 2009, when the global
Reed Exhibitions | EIBTM Trends Watch Report 2012 4
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