Emerging nations lead growth
Source: Agencies |
July 19, 2011, Tuesday
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Print Edition
Print Edition
THE world economy should expand steadily this year and next, thanks mainly to prospering emerging powers, a Reuters poll showed. But fiscal troubles lurking in Europe and potentially the United States risk blowing this view apart.
The quarterly survey of more than 350 economists from around the world showed a dimmer outlook for most of the rich-world Group of Seven economies since the last survey in April.
Only Germany, booming thanks to buoyant exports, is expected to post growth averaging more than 3 percent this year.
Elsewhere, fiscal austerity in Europe and growing debt fears have soured analysts' sentiment.
By contrast, emerging powers have enjoyed near double-digit annual growth rates since the global recession - but they face risks as they struggle to contain rampant inflation.
Economists pointed to the fiscal crisis raging in the eurozone's peripheral countries and the political deadlock in the US surrounding an increasingly urgent lift to the country's legal debt ceiling as the biggest risks to global economic growth.
"If the (eurozone) debt crisis is mishandled, it's a major threat. But it's a threat comparable to the mishandling of the US sovereign debt crisis. It's six and two threes," said Willem Buiter, chief economist at Citi.
The poll predicted the world economy expanding 4.1 percent this year and 4.3 percent next year, little changed from April's survey.
Buiter said authorities in emerging markets are largely behind the curve in monetary policy, which could leave open the prospect that their boom could become a bubble and then a bust - but not for a couple of years.
While economists cut their US economic outlook compared to a poll last month, they still see the US performing better this year than European peers, such as Britain, Italy and France.
They see the US economy growing an average 2.5 percent this year and 3.0 percent next year - comfortably in excess of the sub-2 percent growth rates seen for this year for Europe's G7 members, excluding Germany.
Japan's recovery from the March 11 earthquake and tsunami that killed at least 21,000 people looks likely to proceed at a faster pace than thought even last month, helped by a restoration of factory output.
Although Japan's economy likely contracted for a third straight quarter in April-June, it is likely to emerge from recession this quarter as it shakes off supply constraints, according to the poll.
The quarterly survey of more than 350 economists from around the world showed a dimmer outlook for most of the rich-world Group of Seven economies since the last survey in April.
Only Germany, booming thanks to buoyant exports, is expected to post growth averaging more than 3 percent this year.
Elsewhere, fiscal austerity in Europe and growing debt fears have soured analysts' sentiment.
By contrast, emerging powers have enjoyed near double-digit annual growth rates since the global recession - but they face risks as they struggle to contain rampant inflation.
Economists pointed to the fiscal crisis raging in the eurozone's peripheral countries and the political deadlock in the US surrounding an increasingly urgent lift to the country's legal debt ceiling as the biggest risks to global economic growth.
"If the (eurozone) debt crisis is mishandled, it's a major threat. But it's a threat comparable to the mishandling of the US sovereign debt crisis. It's six and two threes," said Willem Buiter, chief economist at Citi.
The poll predicted the world economy expanding 4.1 percent this year and 4.3 percent next year, little changed from April's survey.
Buiter said authorities in emerging markets are largely behind the curve in monetary policy, which could leave open the prospect that their boom could become a bubble and then a bust - but not for a couple of years.
While economists cut their US economic outlook compared to a poll last month, they still see the US performing better this year than European peers, such as Britain, Italy and France.
They see the US economy growing an average 2.5 percent this year and 3.0 percent next year - comfortably in excess of the sub-2 percent growth rates seen for this year for Europe's G7 members, excluding Germany.
Japan's recovery from the March 11 earthquake and tsunami that killed at least 21,000 people looks likely to proceed at a faster pace than thought even last month, helped by a restoration of factory output.
Although Japan's economy likely contracted for a third straight quarter in April-June, it is likely to emerge from recession this quarter as it shakes off supply constraints, according to the poll.
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