International Economic Outlook 4/2012

World economic growth to stay slow for long time

Compared with the beginning of this century, when growth in the industriali sed countries was debt induced and as such unsustainable, world economic growth will stay slow for a lo ng time into the future.
During times of weak economic growth and slow inflation central banks will ke ep their policy rates low and continue their strong support for the markets using unconventional measures. Growth will resume slowly because of the efforts to reduce the incurred debts. The Euro Area and Japan went into a recession in the autumn of 2012. Thanks to the crisis-solving decisions reached in the Euro Area last autumn, the outlook is improving in this region providing the member countries continue to build trust and thus support growth. Japan’s new government seeks to boost the economy that suffers from the continuing deflation.
Debt consolidation in the industrialised countries will dampen growth for years to come. In China, sluggish export demand is dampening growth opportunities even though domestic demand is being strengthened. Emerging markets are the growth engines of global demand. China’s special status will strengthen in the short term even though its double-digit growth rates are a thing of the past. The rapid ageing of the Chinese population will slow down the new leadership’s ambitious goal of raising the people’s living standards significantly above developing country status during the next ten years.

  • International Economic Outlook 4/12
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