Economic Global Outlook Is Mostly Steady, With Asia Topping the List
The economists at IHS Global Insight took a snapshot of the world’s economic future for 2010 and predict that interest rates will stay low, fiscal stimulus packages will be curbed and inflation won’t be a problem.
However, there is a possibility that there could be a double-dip downturn, or decline in economic output, if energy prices increase sharply, consumers pull back in the face of rising unemployment or a number of large financial institutions fail.
Nariman Behravesh, the chief economist at IHS Global Insight, an economic- and financial-forecasting company in Lexington, Mass., said that global gross domestic product will expand by 2.8 percent next year, which is better than the 2 percent drop experienced in 2009. But it is not quite up there with the 3.5 percent to 4 percent growth normally experienced around the world.
Other predictions include:
bull; The U.S. economic recovery will start slowly, with the country’s GDP inching up 2 percent to 2.5 percent in 2010. While gains in housing and equipment spending should be decent, consumer purchases will probably rise by only 1.8 percent.
bull; Europe and Japan’s economic recovery won’t be as vigorous as the one in the United States.
bull; Interest rates in the G-8 countries, the world’s largest economies—which include Canada, France, Germany, the United States and Russia—will remain very low. The European countries are expected to see their economies grow by 0.9 percent. Japan’s GDP should be up by about 1.4 percent.
bull; Most emerging-market countries, particularly those in Asia, will recover nicely next year and should grow faster than the United States. Asia, excluding Japan, is anticipated to expand by 7.1 percent. Latin America, the Middle East and Africa will see gains in the 3 percent to 4 percent range.
bull; Commodity prices should remain stable or decline. The price of oil is expected to fall from $75 a barrel to $65 a barrel next spring and then move up to $70 a barrel by the end of 2010.
bull; While the U.S. dollar may strengthen a little at the beginning of next year, it should then start to decline in value, especially when compared to emerging-market currencies.
bull; There is a 20 percent chance that there could be a double dip in the economy next year. That could happen if oil prices suddenly spike, consumers rein in their wallets as unemployment rises or if major financial institutions go under. It would probably take a combination of events for the economy to dip back into negative territory.—Deborah Belgum
