As the global economy remains mired in the gray area between crisis and recovery, a confluence of factors ensures that worldwide anxiety over the near-term economic outlook will not abate anytime soon, according to the Manufacturers Alliance for Productivity and Innovation (MAPI) Global Outlook – May 2012.
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In the report, MAPI senior economist Cliff Waldman concludes that a recession and renewed financial turmoil in the Eurozone, significant slowing in large emerging market economies, and continued subpar economic performance in the U.S. virtually guarantee ongoing angst around the globe.
"The troubled Eurozone continues to be under the spotlight," Waldman said. "While the new management in the European Central Bank has shown itself to be capable of aggressive action, the risks from the Eurozone crisis remain the biggest issue on the world scene. Concerns have been heightened by the recent elections, which created such political turmoil in Greece that fears of a disorderly exit from the euro have escalated."
Aggregate GDP growth in non-U.S. industrialized countries, which include Canada, the Eurozone (plus Denmark, the United Kingdom and Sweden) and Japan, is expected to be no higher than 0.5 percent in any quarter through 2012. Even in a moderate recovery, a 3 to 4 percent range would be considered "normal." In 2013, growth of 1 percent is anticipated in the first quarter, 1.5 percent in the second quarter, and 1.2 percent in the last two quarters.
Deceleration has become apparent in many developing economies. MAPI forecasts a compound annual GDP growth rate in these countries of 3.5 percent by the fourth quarter of 2012 and 4.7 percent by the end of 2013. Growth rates between 5 percent and 6 percent would be more typical.
U.S. exports, which grew 6.7 percent in 2011, are likely to decelerate to 4.2 percent in 2012 before rebounding slightly to 5 percent during 2013. The growth of goods and services imports is expected to slow from 4.9 percent in 2011 to 4.1 percent in 2012 and to 4.2 percent in 2013.
"The manufacturing sector's output growth has been strong, averaging 5.9 percent since the recovery began during the third quarter of 2009," Waldman said. "This is markedly more than twice the growth rate of GDP and is stronger growth than manufacturing experienced in the 2002-2007 or 1992-2000 expansion periods. Unfortunately, the weak and risky global economic outlook is a headwind for U.S. factory sector growth."
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