As we start 2011, economic analysts are offering their predictions for the year.
According to IHS Global Insight’s top 10 economic predictions for 2011, a two-speed recovery is likely to be a feature of the global economy throughout 2011. The slowing in growth seen in the latter half of 2010 will extend into the first half of 2011 for nearly every region and country in the world. However, the global recovery should pick up in the second half of the year, as some of the worst-hit sectors (housing and automotive) rebound and consumer and business confidence improves.
IHS believes this means that growth in calendar-year 2011 (3.3%) will be a little weaker than in 2010 (4.0%), but then followed by a bounce-back in 2012 (3.7%).
IHS predicts that the US recovery will pick up steam as the year progresses - especially during the second half. In particular, the housing sector will no longer be a drag on GDP growth, and is likely to make a positive contribution and, thanks to a weaker dollar, the US will enjoy export-led growth. This means that GDP growth will average 2.7% in the second half, compared with 2.1% in the first half.
Europe and Japan will also see slightly stronger GDP growth in the second half of 2011. The pace of growth in Europe is slowing, mostly because of fiscal tightening and concerns about debt. As a result, growth will slow through the early part of 2011, before stabilising and picking up — assuming that the recent euro crisis does not evolve into something worse. As a result, the EU will grow by about 1.6% in 2011. Despite recent strength, Japanese growth is also likely to hit a low point in early 2011, averaging only 0.7% over the year.
IHS predicts that emerging markets will also slow, but continue to grow three times faster than the developed world. Economic growth in almost all of the emerging world is also likely to be affected by the slowing trends in the developed economies. Among the big emerging markets, China and Brazil will see the most pronounced slow down, while growth in India and Russia will not suffer much. As a result, the emerging world is likely to grow about 6%, compared with 2% for the developed world.
