About this Dataroom
The latest real GDP forecasts from the Economist Intelligence Unit. These global aggregates are constructed using our forecasts for 116 of the world's largest economies. Below is an excerpt of our latest macroeconomic analysis. For more please visit: gfs.eiu.com
The global economy has turned decidedly downwards (August 17th 2011)
The outlook for the global economy is darkening. A historical downgrade of US debt has accelerated a massive loss in global confidence, which began with new data showing that the US economy barely grew in the first half of this year. Rising alarm about the future of the euro zone, where the debt crisis is now threatening to engulf Italy and Spain, has darkened the mood even more. The twin prospects of a collapse of US growth and the break-up of the euro zone have led to violent swings in equity markets, punctuating the worst period for the global economy since the grim days of late 2008.
At the heart of the downturn is an erosion in consumer, business and investor confidence, brought on by a series of temporary shocks—and policy blunders—that have been deeper and more damaging than expected. Piled on to the foundations of a fragile 2010 recovery, the slump in sentiment has slowed job creation, business investment and manufacturing output, leaving developed economies nearly stagnant. China is also showing signs of slowing, as are other emerging markets such Brazil, and they will slow further if Western export markets slump.
The deterioration in developed-world economies, especially in the US, has led the Economist Intelligence Unit to lower its forecast for global economic growth this year to 3.6%, from 4.1% previously and to 4.9% in 2010. These figures are calculated at purchasing power parity (PPP) exchange rates, which give greater weight to emerging-market economies. At market exchange rates, the basis for recording business sales and repatriating profits, global growth will slow to 2.5% this year from 3.9% in 2010.