Swedbank’s Global Economic Outlook • 29 March 2010
1. Favourable conditions in the globaleconomy
In 2010 the global economy grew more strongly than we hadforecast. The difference can be explained by higher activity inemerging countries, particularly the BRIC countries, whichaccounted for two thirds of global GDP growth.
The positivetrend was also due to a surprisingly strong recovery in developedcountries such as Japan, Germany and Sweden. On the otherhand, GDP growth in the US and other euro zone memberslargely met our expectations at the beginning of last year.
Contribution to global GDP growth by various countries/regions, 2010
Seen through the rear view mirror, global economic developmentwas generally positive, and current conditions are characterisedby cautious optimism driven by strong global trade, relatively highprofits and increased access to credit in the corporate sector,which as a whole should lead to investments and new jobs.Conditions in many crisis-ridden economies are still weaker thannormal with respect to the housing, labour and credit markets.Despite improvements, there are remaining problems of a morelong-term, structural nature, which take time to resolve.The economic stimulus is still a having positive impact on theeconomy. In emerging countries, stimulus programs have gonetoo far, raising the possibility of an overheating. Here, policy hasto be tightened more than has been the case so far in order toslow growth to more sustainable levels going forward. Indeveloped countries, monetary policies have remained expansivewhile financial policies are being tightened, which will eventuallyimpact growth prospects more negatively.The major differences in how developed countries and emergingeconomies have handled the crisis are clearly evident in thediagram below, which compares industrial production in variouscountries/regions. The US and Europe are now back toproducing slightly more than their 2000 levels, while Japan is on
The BRIC countries refer to Brazil, Russia, India and China. Refers to GDP growthweighted with purchasing power parity (PPP). In dollar terms, the BRIC countriesaccounted for nearly half of global growth.
zoneUK Japan China India Brazil Russia2010
Last year the global economy grew faster than expected But the situation in crisis-ridden economies is weaker than normal