Global economic growth slows sharply


The world economy recovered faster and more conspicuously than expected in 2010. Until the beginning of 2011 expectations were therefore still mostly optimistic. However, the pace of economic growth slowed considerably in the first half-year 2011. This was accompanied by sluggish expansion rates in world trade. Several factors were responsible for this: emerging markets, which had previously experienced a rapid upswing, began to show signs of overheating and some countries responded by tightening their economic policies. Further pressure was added by the steep rise in commodity prices, partly due to the political unrest in the Arab world, and by the effects of the earthquake in Japan. At the same time, some of the economic stimulus programmes launched by countries in the midst of recession began to expire, removing another positive impetus. The situation was exacerbated in some industrialised countries by entrenched unemployment, high household and public-sector debt and weakened property markets. Since mid 2011 the debt and bank crisis has worsened in Europe and the USA, triggering worldwide falls in business and consumer confidence. This uncertainty is also visible in the sharp rise in volatility on stock markets.

Economic downturn mainly affects industrialised countries

There are still differences in economic growth rates between industrialised and emerging markets. Whereas the industrialised economies saw expansion rates slow substantially, growth in emerging markets remained robust. The pace of expansion slowed there too, but only slightly, and as inflation was high in many cases this was often welcomed politically. The global economy grew by a total of 3.0 per cent in 2011. This is well below the previous year’s rate of 4.3 per cent.

In the USA the economic recovery picked up speed in the third quarter, after only modest developments in the first half-year. The expansion was bolstered by higher consumer spending, company investment and exports. Growth for 2011 came to 1.8 per cent.

GDP development

in %

2011*

2010

2009

2008

2007

Source: Global Insight World Overview as of 14.1.2012.

*

Forecast.

World

3.0

4.3

–2.0

1.6

4.1

Europe

1.9

2.2

–4.1

0.4

3.3

Germany

3.0

3.6

–5.1

0.8

3.4

North America

1.8

3.0

–3.4

–0.2

1.9

South America

3.9

5.8

–1.7

4.0

5.4

Asia/Pacific

4.5

7.2

1.9

3.6

6.8

China

9.2

10.4

9.2

9.6

14.2

Middle East

5.4

4.2

0.6

5.0

5.4

Africa

1.5

4.7

2.5

5.5

6.2

Japan’s economic performance was severely depressed by the effects of the catastrophes in March 2011. Since this slump, the Japanese economy has recovered again sharply, however, supported by economic policies. A contraction of 0.7 per cent overall was recorded here for 2011. The other Asian economies reported very strong growth, but there too, the pace of expansion was somewhat reduced, so that a growth figure of 4.5 per cent has now been registered for the Asia/Pacific region. China and India in particular saw their economies grow sharply, driven by private-sector investment and consumer spending. Their economic output increased by 9.2 per cent and 6.8 per cent respectively in 2011.

In Europe the economy weakened considerably over the course of 2011 as global growth rates declined and governments began taking widespread action to consolidate their budgets. The debt and banking crises worsened and the resulting loss of confidence had an adverse effect on growth rates. Growth in European gross domestic product was 1.9 per cent. At the same time the German economy was much more stable than this. Propelled by consistently high exports and investment and robust consumer spending, gross domestic product climbed by 3.0 per cent. This was only just below the previous year’s figure of 3.6 per cent.