EUROPE'S WOES WILL SLOW GROWTH IN GLOBAL ECONOMY

www.conferenceboard.ca

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
E-mail: corpcomm@conferenceboard.ca

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