Issue link: http://read.dmtmag.com/i/103862
Global Economic Outlook for 2013 PRESIDENT'S POST 6 T his is a great time to reflect on the events of the past year, and look ahead to the challenges and opportunities of the New Year. In many aspects, 2012 was a year of wait and see: waiting for a path forward on the European crisis; waiting for the results of a polarized U.S. election; waiting for a resolution to the U.S. fiscal cliff; waiting for the Chinese leadership transition; waiting for the elusive peace in the Middle East; and waiting for a clear path to global growth. Uncertainty was a big factor in dragging down world growth throughout 2012. Weaknesses in the major developed economies are at the root of the global economic slowdown. Europe: In particular, Europe is trapped in a vicious cycle of high unemployment, financial fragility, fiscal austerity, heightened sovereign risks and low growth. Several European economies are already in recession. In Germany, growth has slowed significantly, while France's economy is stagnating. Conditions are worse in Spain and Greece, where more than a quarter of the labor force is without a job and more than half of the youth is unemployed. The European Union has taken steps toward greater fiscal integration and coordinated fiscal supervision and regulation, but there has been no significant initiative toward boosting growth in the near future, or reforming the ever-mounting crisis in the labor markets. China: China might see a cyclical bounce this year, though structurally, growth is slowing. Since the global economy is unstable, hopes of external demand supporting Chinese growth are fading. Policy makers have taken a cautious approach toward easing monetary policy, which reflects they are serious about rebalancing their own economy, by stimulating private consumption. Southeast Asia: The Southeast Asian countries are expected to grow at a robust rate over the next five years, matching the pace before the global financial crisis. Such growth projections will come despite some slowing down in the region's giants, China and India, according to a recent report released by the Organization of Economic Cooperation Development (OECD). Roger Terán IDA President 2012 According to the OECD, the 10 countries of the Southeast Asian Nations (ASEAN) are expected to average an annual growth rate of 5.5 percent over the next five years. This will be faster than the 4.6 percent registered in 2011, while matching its 2000/07 expansion. "Domestic demand growth, and particularly private consumption and investment, will be the main drivers of growth in most ASEAN countries," OECD deputy secretary general Mr. Rintaro Tamaki said recently. Australia: The economy in Australia faces risks from a decrease in commodity prices and a slowdown in the global economy. The biggest risks to the Australian economy are the European crisis, sluggish growth in the United States and a hard landing in China. A decline in commodity prices would hurt consumption and investment. Middle East: Most oil exporting countries have experienced robust growth as a result of record-high oil revenues and government spending. Social unrest and political instability, now in Syria, continue to elevate the risk assessment for the entire region. On average, GDP growth in the region is expected to decelerate to 3.3 percent in 2013 from an average of over 5 percent during the past couple of years. Africa: Economies in Africa are forecast to see a slight moderation in output growth in 2013 to an estimate of 4.8 percent, down from 5 percent growth in 2012. Major factors underpinning this continued trajectory include the strong performance of oil exporting countries, continued fiscal spending on infrastructure projects, and expanding economic ties with Asian countries. IDA UNIVERSAL January-February 2013