OTTAWA, March 6, 2013 /CNW/ - China and Brazil will shine, Europe and
Japan will lose ground, and growth in the United States will remain
hostage to political confrontations, according to The Conference Board
of Canada's World Outlook: Winter 2013.
Overall, the world economy will post growth of about 2.6 per cent this
year, much the same as in 2012.
The death of President Hugo Chavez adds to the uncertainty in the
Despite the gloom hanging over Europe, there is reason for cautious
optimism that aggressive policy action will keep the eurozone intact.
China's economy is expected to grow by around 8 per cent this year.
Japan is in its fifth recession in 15 years.
Although emerging markets led by the Asia-Pacific region should grow
strongly this year, much of the developed world has been dragged lower
by the downturn in the eurozone. The modest growth in the U.S. economy
is at risk due to automatic budget cuts that were implemented in early
"The seemingly endless economic problems in Europe have dragged down the
entire world economy, primarily through capital and financial markets.
Also, the slowdown in export demand from many eurozone countries hurt
economic growth in emerging markets. Fortunately, the outlook for
emerging markets has improved in early 2013, which will enable the
global economy to at least continue to expand, albeit at a tepid pace,"
said Kip Beckman, Principal Economist.
The European Union and European Central Bank took aggressive action last
year, confirming that they will do what they must to preserve the
common currency. These steps lowered the pressure on the European
financial system and banks. Nevertheless, the Conference Board expects
real GDP in the eurozone to contract by 0.1 per cent this year, the
second consecutive year of decline. Due to fiscal austerity,
recessionary conditions will persist this year in many countries,
including Italy, Spain, and Greece.
The United States managed to avoid tumbling over the fiscal cliff in
January, but the President and Congress could not reach agreement to
avoid the spending sequester that kicked in on March 1. As a result,
$85 billion in cuts to government spending will take place this fiscal
year. Also, a decision to lift the debt ceiling must be addressed by
the end of March. The U.S. Outlook calls for growth of a tepid 2.3 per cent this year - although a
political agreement to tackle the country's fiscal challenges would
give cause for higher-than-forecast growth.
Public investment in infrastructure and a recovery in demand for
high-technology goods and services are boosting industrial production
in many Asia-Pacific countries. Excluding slumping Japan, real GDP in
the region will expand by 6.6 per cent, up from a gain of around 6 per
cent last year. Japan finds itself in yet another recession—the fifth
in the last 15 years - due in part to the approaching end of government
spending on earthquake reconstruction.
Most economies in the Latin-American region started to pick up speed at
the end of last year. Venezuela, however, could easily slip into
recession this year if the death of President Hugo Chavez continues to
paralyze economic decision-making in the country.
Latin America will benefit from mining investment and a rebound in
economic growth in Brazil, the region's most powerful economy. The
Brazilian economy is expected to expand by 3.4 per cent this year, due
in part to infrastructure preparations for the 2014 World Cup of
Listen to audio commentary by Kip Beckman about the World Outlook.
SOURCE: Conference Board of Canada
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448