OTTAWA, Feb. 7 /CNW/ - A weak outlook in Europe is a key factor in
slowing global economic growth to 3.4 per cent in 2011 - from almost
four per cent last year - according to The Conference Board of Canada's
World Outlook - Winter 2011.
"With growth in the United States expected to accelerate this year,
Europe remains the weak link in the global economy," said Kip Beckman,
Principal Economist. "European governments are under increasing
pressure to deal with soaring fiscal deficits and debt, even though
private sector activity remains muted in most EU countries."
Following less-than-stellar gain of 1.6 per cent last year, real gross
domestic product (GDP) growth in the European Union (EU) is expected to
be even weaker in 2011, at 1.4 per cent. The combination of austere
fiscal policy, sluggish private sector demand and limits on credit from
financial institutions could possibly push parts of the EU back into
recession this year, although the Winter 2011 outlook does not call for it. The current domestic unrest in Egypt and
other Middle East countries is not expected to affect the global
outlook, unless it leads to a substantial and prolonged rise in oil
prices. Follow this link for more on the situation in Egypt (http://www.conferenceboard.ca/economics/hot_eco_topics/default/11-02-03/Egypt_s_Broken_Dreams.aspx).
The Asia-Pacific region will, once again, lead the world in economic
growth. Real GDP is forecast to expand by 5.1 per cent this year. China
and India will continue to enjoy strong domestic demand and industrial
production. Due to higher interest rates, China's GDP growth is
expected to slow to 9.1 per cent this year from 10.1 per cent in 2010.
India's growth in 2011 is expected to be about 8.5 per cent, the same
as last year.
However, Japan is going against the trend in the Asia-Pacific region.
The gradual winding down of fiscal stimulus will result in weaker
household spending. Also, growing investor concern about Japan's
extremely high debt levels could lead to rising interest rates over the
near term. Japanese real GDP growth is expected to slow to 1.1 per cent
this year from 3.5 per cent in 2010.
In Latin America, weaker global trade and a leveling off in some
commodity prices will result in slower growth of around four per cent
this year. Brazil, the region's largest economy, will increase interest
rates to contain inflation. As a result, real GDP growth will slow to
4.4 per cent this year, down from 7.5 per cent in 2010.
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448