The Global Economy and the 'R' Word

The global economy is still a long way from falling into a recession, but continued expansion in China is of prime importance

Andy Brunner, 10 October, 2011 | 1:04PM
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Economic & Financial Market Background
Even following sizeable reductions to economic growth forecasts in recent months, September witnessed another significant lowering of estimates for 2012, particularly in the developed economies. The proximate cause was a further significant deterioration in the economic and financial situation in the eurozone with many commentators now believing that a mild recession is underway. Even the core European countries are now being dragged down by the problems of the periphery via financial sector transmission. French banks were the latest to be caught in the firing line with the share price of BNP Paribas (BNP), France's largest and one of the world's biggest banks, at one stage down nearly 60% from the beginning of July and only marginally above its low during the financial crash. Such ignomy for a bank ranked just two months ago by Global Finance as the World's 15th "safest" bank (HSBC (HSBA) was 16th and Barclays (BARC) 49th).

The intensifying crisis in the eurozone continued to spill over into tighter financial conditions elsewhere and contributed to further downgrades to growth in the U.S. and U.K. Even the emerging economies have been drawn into the financial quagmire with massive capital outflows resulting in sharp falls in financial asset prices and currencies in many countries. Even so, once again it was the developed world that suffered more substantial cuts to forecasts than the emerging economies although downward revisions for the latter are now accelerating. The following table shows current GDP forecasts for the main economies for this year and next and compares them with those from the July GIS/AA document of just three months ago (in brackets).

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

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