No Acceleration in Global Growth Rate for Rest of 2013, Will Fall Slightly Below 3%
Quarterly Statement on The Conference Board Global Economic Outlook from Chief Economist Bart van Ark
Sep 17, 2013, 12:00 ET
NEW YORK, Sept. 17, 2013 /PRNewswire/ -- The growth of the global economy for the remainder of 2013 will remain a mix of a cautious improvement in economic conditions in mature economies and a stabilization of the slower growth rates in major emerging markets. Overall the global growth rate will end up at a disappointingly low 2.9 percent for the year, about 0.3 percentage points below the global growth performance in 2012.
The United States has exhibited significant volatility in growth performance over the past few quarters. Growth in the first quarter of 2013 was at a dismal 1.1 percent (annualized) mainly because of the implementation of government budget cuts and weakness in investment. At 2.5 percent, the second quarter rebounded to quite reasonable growth performance as consumption held up and housing and real estate investment in particular added positively to the economy. The labor market, however, is improving very slowly and labor participation keeps declining. U.S. growth in the third quarter is unlikely to be as strong as in the second, but we may see some strengthening in the fourth quarter driven by more consumer and investor optimism.
The Euro Area came out of recession in the second quarter. However, growth will remain very slow for the remainder of the year as austerity programs, high unemployment, and slower global growth, together with continued uncertainty about financial stability in several member states, continue to create headwinds for Europe's recovery. Japan is also experiencing a decent recovery on the back of monetary and fiscal stimulus. Still, altogether the GDP of mature economies will grow at no more than 1.2 percent for 2013, just 0.1 percentage point up from 2012.
The bigger changes in recent months have occurred in the emerging economies. China is settling into a slower growth path which we expect to continue into 2014. However, the upheavals in credit markets during the early summer have so far not added significant downward pressure on the anticipated slowdown. We therefore keep our annual growth estimate for China in 2013 at about 7.5 percent. But we see little chance of an increase from there, even headed into 2014. Some downward adjustments to our 2013 growth estimate are needed for other large emerging markets, notably India (from 4.7 to 4.2 percent), Brazil (from 2.3 to 2 percent) and Mexico (from 3.2 to 2.5 percent). All three economies are struggling with internal structural adjustments. India and Brazil, especially, also suffer from capital outflows in particular as a result of the anticipated change in the monetary stance of the United States. However, the picture for the emerging markets is very diverse, as other economies, including most in the ASEAN region, are showing better growth performance in 2013 than in 2012.
In total, emerging and developing markets will therefore grow at 5 percent in 2013, down from 5.5 percent in 2012. This is still almost five times the growth performance of mature economies. However, the growth gap between mature economies and emerging and developing economies is gradually narrowing. This might be a healthy development for the sustainability of global economic growth in going forward, and part of the process of global rebalancing of economic activity that has gradually evolved in recent years, and which is likely to continue over the next five years or so.
For the update of The Conference Board Global Economic Outlook, see: http://www.conference-board.org/data/globaloutlook.cfm. On November 12, The Conference Board will publish its new annual Global Economic Outlook, including growth projections for 2014, 2015-2019 and 2020-2025.
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