Global economic outlook 1st quarter 2010 |
In this, our first Global economic outlook of the new decade, our economists offer their views on the near-term direction of the world’s major economies. We also look at a few major issues that have attracted the attention of investors and business leaders:
- The future of the US dollar
- The changing role of the emerging nations of Asia
- The recent upsurge in the price of gold
Among the geographical analyses is a discussion of the Eurozone, in which we note that although the region is in recovery, much uncertainty remains, partly due to the two-track nature of Europe’s recovery. Some countries are doing well while others are struggling with imbalanced public finances and structural weaknesses. Ireland, Italy, Spain and Greece are cited as of particular concern. While the region’s core economies of Germany and France have done better, they still face the challenge of shifting toward more domestic demand-driven growth. We note how the two-track nature of the recovery is creating strains for the euro, for European monetary policy and for relations between member countries.
We also examine the outlook for the UK and conclude that serious problems remain. Although recovery will take hold in 2010, it will likely be weak. The problems include tight credit markets, lingering effects of excessive consumer debt, weak employment markets, and constraints on government spending - especially following a mid-year election. The most promising part of the UK economy will be exports and manufacturing, owing in part to the weakness of the pound.
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