OTTAWA, July 30 /CNW Telbec/ - Thanks to the strong performance of many
emerging markets in Asia and Latin America, the global economy is showing
resilience in the face of the slowdown in the United States, Japan and Europe,
according to the Conference Board's World Outlook - Summer 2008.
"Growth in the world economy has slowed from its pace of a few months
ago, but the weakness has been largely confined to the United States and
Europe," said Kip Beckman, Principal Research Associate. "Developing
countries, especially those in Latin America and the Asia-Pacific region, have
sustained their strong growth rates in part through trade diversification away
from dependence on the struggling U.S economy.
"However, rising food and fuel costs are turning inflation into a fact of
life in both developing and developed countries."
Despite inflationary pressures, some central banks are reluctant to
increase interest rates. Interest rates remain low in the United States for
instance, because the Federal Reserve does not want to do more damage to the
fragile housing market. In developing economies, higher interest rates would
put upward pressure on exchange rates and make exports less competitive.
The world economy is expected to grow by 2.8 per cent in 2008. Latin
America, which will grow by 4.4 per cent this year, is less dependent on the
fortunes of the U.S. economy than it has been in the past, due in large part
to its trade diversification and growing domestic markets. In the Asia-Pacific
region, while real gross domestic product (GDP) growth will be a solid 4.7 per
cent this year, rising inflation poses a serious downside risk.
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