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Category: Global Economy Sub-category: World Economy
Document type: news
UNCTAD has said that because of high unemployment and stagnant wages, global GDP growth is expected to stagnate at 3.1% in 2011 even lower than 3.9% in 2010. Growth in US is likely to remain benign thanks to flagging domestic demand, stagnating wages and employment and low interest rates. The debt crisis, combined with fiscal austerity is expected to be a major drag on the global growth.
While developing economies are expected to achieve the pre-crisis growth rate of 6% this year, growth in developed economies is expected to be between only 1.5-2% as the former have managed to decouple from global slowdown due to domestic demand. South Asia, of which India is a part is likely to be among the best performers with a growth of 7% in 2011. Although growth in developing countries has to depend on the expansion of domestic markets, they face significant external headwinds because of economic weakness in the developed economies and a lack of significant reforms in international financial markets. Emerging economies remain vulnerable to trade and financial shocks that could negatively impact export volumes and the prices of primary commodities like in 2008.
Trade remains an area of concern, especially for the richer nations. In 2011, the volume of international trade is expected to regain single-digit from 14% in 2010, particularly in developed economies. Recovery of trade has been faster in developing than in developed economies.
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