Growth Outlook

April 19, 2012

Upwardly revised IMF forecasts released on Tuesday exerted greater influence on investor risk aversion than many recent hard data releases that were more disappointing than forecast.  Also, the modifications from previous forecasts released in January reversed only a fraction of the downward revisions embodied in those January estimates from ones made and released in September 2011.  The table below compares the latest IMF view on GDP growth to those of last September (shown in parentheses).

GDP Growth, % 2012f 2013f
World 3.5% (4.0%) 4.0% (4.5%)
-Advanced 1.4% (1.9%) 2.0% (2.4%)
— U.S. 2.1% (1.8%) 2.4% (2.5%)
— Euro Area -0.3% (1.1%) 0.9% (1.5%)
— U.K. 0.8% (1.6%) 2.0% (2.4%)
-Devel & Emerging 5.7% (6.1%) 6.0% (6.5%)
— China 8.2% (9.0%) 8.8% (9.5%)
— India 6.9% (7.5%) 7.3% (8.1%)
— Brazil 3.0% (3.6%) 4.1% (4.2%)


The Economist published results of its April survey of forecasters earlier this month with 2012 and 2013 GDP growth projections, while the Bank of Canada reported updated assumed growth rates yesterday.  These three sources including the above IMF numbers are reasonably close and shown below for the U.S., euro area, and Japan.  The IMF projections embody greater contrast in Japan’s case between 2012 and 2013, but average growth of 1.5% per annum over the two-year period is identical to The Economist survey consensus forecasts and only marginally less than what Canada’s central bank has assumed.  The Bank of Canada (BOC), unlike the IMF and Economist survey (ECC), extended its forecast horizon to 2014 and shows expected GDP in that out-year advancing by 3.8% globally, 3.6% in the United States, 1.4% in the euro area and 1.6% in Japan.


  United States Euro Area Japan
GDP, % 2012 2013 2012 2013 2012 2013
IMF 2.1% 2.4% -0.3% 0.9% 0.8% 2.0%
BOC 2.3% 2.5% -0.6% 0.8% 1.9% 1.6%
ECC 2.1% 2.3% -0.5% 0.6% 1.6% 1.4%


The term “peripherals” used for euro zone members with excessive fiscal debt and unsustainably high interest rates is misleading, as such implies economies that are small in size.  Two of Euroland’s four largest economies, Spain and Italy, are in the peripheral class.  The four largest euro area members, in turn, accounts for somewhat over 75% of euro area GDP.  The subset that is those four nations is a fairly accurate microcosm of the whole common currency area.  The weighted average of IMF-projected GDP growth in Germany, France, Italy, and Spain is -0.3% this year and 0.8% in 2013, or almost identical to the IMF projections for all 17 participating Ezone economies. 

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.