Global Economic Outlook 3rd quarter 2011Policymakers confront reality |
The third quarter edition of Deloitte Research’s Global Economic Outlook examines the major areas of uncertainty in the global economy.
The issue unfolds with a look at the Eurozone debt crisis. Specifically, we discuss the causes and various factors related to the crisis. Our focus then turns to the United States where we look at the mechanics and impact of quantitative easing. In our final topical article, we further the debate on whether GDP is an adequate measure of a country’s economic output.
Additionally, this edition of the Global Economic Outlook looks at the evolving recovery, including challenges to growth in affluent markets and the fight against overheating in the emerging world.
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The Global Economic Outlook report is published quarterly by Deloitte Research in the United States (part of Deloitte Services LP).
Topics
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The future of the euro – Part II: Getting it right this time Endless austerity packages are not sustainable. Finding a long-term solution will include agreeing on a common understanding of fiscal discipline, along with the structures to enforce it. |
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QE – What’s in a name? It’s inconclusive whether the first two rounds of quantitative easing (QE) were a success but there’s already buzz about QE3. If increasing liquidity is the Fed’s aim, there are also a bevy of other measures available. |
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GDP Metric – Time for a makeover? Gross domestic product has long been regarded as the principal measure of economic activity but it overlooks the contribution of non-market activities. There is, however, still no perfect alternative. |
Geographies
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United States: Soft patch or double-dip? A combination of one-time events has slowed growth. While problems in the housing market and with sovereign debt in Europe are real, the case for growth seems to be more compelling. |
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China: Tradeoffs continue Recent actions by policymakers suggest that the fight against inflation may be taking precedence over currency concerns. The government aims to increase consumer spending in order for the consumer to eventually drive economic growth. |
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Eurozone: Economic recovery starts to falter There is still a deep divide between the Eurozone’s relatively strong core nations and those at the periphery which are not exhibiting strong growth, but overall, the momentum is slowing throughout. |
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United Kingdom: Inflation headwinds While recent softness in the UK economy could be seen as part of a global phenomenon, high inflation is still cause for concern. Despite sluggish growth, the private sector continues to add jobs. |
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Japan: Finding a silver lining Growth will likely be strong in 2011 but there are a few factors that could throw sand in the wheels of economic activity. The pace of restoring electricity and a heavy dependence on exports pose downside risks. |
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Brazil: Rise in the real Brazil’s currency value and the path of its fiscal policy are the biggest challenges for future growth. A higher valued real has also made the country an attractive destination for global capital. |
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Russia: The BRIC outlier The fight against relatively high inflation and the impact of the price of oil are big concerns for Russia’s policymakers. The question is, what direction will oil prices go? |
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India: It takes two hands to clap Elevated oil prices and government expenditures are likely to keep the fiscal deficit high. The central bank stressed that it is willing to sacrifice growth to rein in inflation. |
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Turkey: More positive than negative Turkey weathered the recession much better than some of its peers. Looking ahead, policy measures to boost savings and reduce the country’s reliance on foreign funds could augur well in the long run. |
Previous issues of the Global Economic Outlook are available here.
