MAPI Global Outlook: Regional Challenges Could Escalate Into Worldwide Risk
Even as 2012 draws to a close, global economic troubles that began in 2007 persist. The central question for the outlook is whether the world is facing yet another stretch of extended adjustments to the aftermath of the 2008-2009 recession or a renewed crisis that will require significant action by governments and central banks, according to a new report.
In the Manufacturers Alliance for Productivity and Innovation (MAPI) Global Outlook (EO-114), senior economist Cliff Waldman concludes that business leaders and investors in an increasingly interconnected world have become concerned that country and regional challenges will morph into a global risk that might be difficult to control.
“Many policy institutions, particularly in the advanced economies, are dangerously low on fiscal and monetary ammunition,” Waldman said. “In one sense, the current world situation is less worrisome than that of 2008 and 2009, as it appears that the renewed weakness in many advanced economies is less dire then was the case in those difficult years.
“In another respect,” he added, “the current situation is more disconcerting given the sharp slowdown in the emerging market economies, whose quick recoveries acted as a global counterbalance to rich-world weakness in the years following the 2009 downturn.”
Aggregate GDP growth in non-U.S. industrialized countries, which include Canada, the Eurozone, Denmark, the United Kingdom, Sweden, and Japan, is expected to accelerate modestly to 0.5 percent during the first quarter of 2013, followed by 1 percent growth for the second quarter and 1.5 percent growth for the last six months of the year. For 2014, MAPI anticipates 2 percent growth in the first half of the year and 2.5 percent in the second half.
For emerging markets, MAPI projects compound annual GDP growth of 2.8 percent in the first quarter of 2013 before accelerating to 4.2 percent by the end of the year. In 2014, developing country growth is expected to advance by 4.7 percent in the first quarter, 5 percent in the second quarter, 4.8 percent in the third quarter, and 4.6 percent in the fourth quarter.
Weak global growth will translate into a weak outlook for U.S. export demand.
U.S. exports, which are anticipated to increase by 3.3 percent in 2012, are likely to decelerate to 2.3 percent in 2013 before rebounding to 4.1 percent during 2014. The growth of goods and services imports is expected to be 2.9 percent in 2012 before rising to 3.9 percent in 2013 and 4.7 percent in 2014.
“As a result, the U.S. current account deficit, which is expected to narrow modestly in 2013, is subsequently anticipated to widen during 2014,” Waldman said.