Expected Real GDP Growth in Major Advanced Economies

August 10, 2009

The results of a new monthly survey of 13 esteemed forecasting institutions were published in the latest issue of The Economist, and the United States enjoys a commanding edge over most other G-7 economies despite being the economy that triggered the financial crisis and global recession.  Participants in the survey project an average positive growth rate for the United States in 2010 of 2.0% after a decline in 2009 of 2.7%.  That sequence produces two-year growth between 2008 and 2010 of minus 0.7%.  By comparison, two-year GDP changes in Britain, Euroland and Japan are projected to be minus 3.2%, minus 3.8%, and minus 5.4%.  Projected Canadian growth between 2008 and 2010 of negative 0.4% would be marginally better than in the United States.  Outside the G-7, two-year GDP declines of 1.9% and 3.7% are anticipated for Switzerland and Sweden, but Australian growth is put at +1.8%.  Australia avoided consecutive quarters of negative growth, thus narrowly escaping the simplest definition of a recession.

Survey participants project continuing low CPI inflation next year of just over 1.0% in the United States and Euroland and another year of deflation in Japan.  The global recession slashed current account imbalances sharply in the United States, Japan and Germany.  None of these is expected to widen much as a share of GDP next year.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.



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