Even signs of economic recovery in superpower US could not save the global economic forecast from being lowered by the Economists Economic Intelligence Unit (EIU). Slower growth in emerging China and troubles in the eurozone can be held accountable.
"We now expect world GDP at purchasing power parity exchange rates to grow by 3.3 percent in 2013. This is down by 0.1 percentage points from our previous forecast of 3.4 percent," said EIUs report on the global economic outlook.
What has stood out so far in 2013 is that the US has managed to show promising job and manufacturing data in spite of policy caveats such as the fiscal cliff. But the eurozone crisis tarnishes it all, with the recent furore over bailout conditions in Cyprus weakening confidence in the 17-nation bloc even more.
As for China, the country had set a tall standard through phenomenal growth figures that shied the developed worlds relatively meager growth rates. However, the trickledown effect of a weaker developed world slowed down exports from the country, contributing to tardy growth numbers.
In fact, the emerging world in general faced a relatively slow 2012, majorly because of lower exports to the developed world, and a weak farm and services output in the case of India. However, it is expected that 2013 will bring promises of much better prospects from this critical part of the global economy.
Rise of the dollar is what the world will continue to see in 2013, thanks to improving conditions in the worlds largest economy. The strength of the worlds core currency has also meant that investor interest in commodities such as gold has dwindled, while slowing growth in the eurozone and China also meant that prices of commodities went south. The coming year doesn seem to suggest that any phenomenal rise in commodity prices is in order, with oil prices expected to continue in the same erratic pattern.
Overall, economic recovery in the US will lead the way towards improving economic performance in other parts of the world. However, eurozone troubles and relatively slower growth prospects in China continue to weigh on global economic prospects.
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World economy: Selected forecasts
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2011 2012 2013 2014 2015 2016 2017
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Real GDP growth (%)
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World (PPP exchange rates) 3.8 2.9 3.3 3.9 4.1 4 4.1
US 1.8 2.2 2.1 2.4 2.3 2.3 2.4
Euro area 1.5 -0.5 -0.4 1 1.3 1.4 1.4
China 9.3 7.8 8.4 7.8 7.7 7.3 6.5
Oil (US$/barrel; Brent) 110.9 112 106.6 104.8 107.3 110 115
US$:€ 1.39 1.29 1.33 1.31 1.27 1.26 1.26
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Source: Economic Intelligence Unit
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