Global Activity 2011-2012 -Imf

2011 - Slowing Global activity

2011 has shown a weak global economic cycle, reflected in both expected and unexpected developments such as the widespread unrest in the Middle East and North Africa, the tragic earthquake and tsunami in Japan.

Crisis in the hit advanced economies, especially United States, with the handover from public to private demand is taking more time than anticipated, sovereign debt and banking sector problems in the Euro area have significantly slowed the global growth.

The emerging and developing economies have performed as forecast, with considerable variation across the regions. Buoyant energy commodity prices have propelled Turkey, Poland, Russia and the Commonwealth of Independent States (CIS) as well as Latin America to high growth rates. Activity in developing Asia weakened modestly in response to global supply-chain disruptions and destocking in the face of more uncertain demand from advanced economies. Sub-Saharan Africa continued to expand at a robust pace. By contrast, economic activity in the Middle East and North Africa region as already mentioned suffered from political and social conflict, although strong revenues boosted the economies of oil exporters.

2012 Expansion forces are expected to offset from contraction forces

The result of the various developments in advanced and emerging economies was unexpectedly weak from the second half 2011 but, the uneven growth will continue and the most noteworthy forecast is the reduction in the real global GDP, by more than 1 percentage point over 2011 and 2012.

In the advanced economies the growth in 2012 will be affected demand and tensions from the financial turmoil will weigh on investment and consumption, keeping real GDP growth very low or worst will be forecasted as negative for many counties of Euro Area during 2012. This assuming that national and euro area policies recover sufficiently strong to keep financial turmoil under control.

In most emerging and developing economies the growth in 2012 will remain relatively robust because they can counter weaker foreign demand with less policy tightening.

2012 Global growth is expected to remain around 3-4 percent.

The real GDP growth in the major advanced economies--the United States, euro area, and Japan--is forecast to rise really modestly in 2012, as the effects of temporary disturbances abate and the fundamental drivers of expansion slowly reassert themselves. Activity will be more robust in a number of other advanced economies. In emerging and developing economies, capacity constraints, policy tightening, and slowing foreign demand are expected to dampen growth to varying extents across countries.