Dec 29 - The following are economic outlooks for 2011 from selected major banks. The item will be updated to include additional views when they become available.
New entries marked *
* HSBC - A misfiring growth engine
“The global economy looks a whole lot happier than it did six months ago. Fears of a double-dip have faded. At the start of 2011, we are raising our growth forecasts (again). For the world as a whole, we expect growth of 3.3 percent. Once again, the emerging world is setting the pace, with growth of 6.4 percent compared with a much more modest 2.3 percent for the developed world.
“Nevertheless, there are one or two highlights within the developed world, most obviously a big upgrade to our numbers for the U.S., helped along by the recently-announced tax changes for 2011 and 2012.
“While this cyclical news is mostly encouraging, the structural position is a lot more disturbing. Most Western economies are still a long way short of the paths they had been on before the crisis began so, although growth is picking up, the pace of recovery is still disappointingly weak: the high rate of U.S. unemployment simply emphasises the point.
“The lacklustre nature of the recovery is all the more remarkable given the scale of the policy stimulus on offer. Yet there is an obvious explanation: Western nations are suffering from a toxic mixture of high debts and, by past standards, low incomes.
The implied de-leveraging simply reduces the effectiveness of standard macroeconomic policy. This is leading to strains in the financial `engine room’ of Western growth.”
SOCIETE GENERALE - Good bad or ugly rebalancing?
“We have made only modest revisions to our 2011 outlook, and our overall scenario of a stuttering recovery remains on track.
“Cash rich companies have money to hire and invest but remain cautious.
“Inflationary pressure (is) in several emerging economies — but still large output gaps entail low inflationary pressures in the developed economies.
“BoJ and Fed easing further through QE and ECB exit delayed. Monetary policy exit will continue in emerging and commodity producers. Dynamic emerging Asia to opt for currency appreciation as part of the policy mix.”
GOLDMAN SACHS - Room to grow
“We expect real global GDP to rise 4.6 percent in 2011 and 4.8 percent in 2012, implying three consecutive years of above-trend global growth. This places us well above the consensus of 4.1 percent for 2011 and probably for 2012 as well (there is no consensus yet).
“Despite our relative optimism on global GDP, we are broadly in line with consensus on inflation. This combination of strong growth and moderate inflation reflects our view that there remains significant spare capacity at a global level.
“However, there is considerable cross-country variation in this regard, with large output gaps in most advanced economies offset by increasing capacity constraints in some EM economies. While we are below consensus on inflation in developed economies, we are above for most emerging markets.
“While our central (global) scenario is a positive one, there are some clear downside risks — with the most important of these stemming from post-crisis fiscal overhang, particularly in Europe. And policy risk could continue to make the environment for risk-taking and entry of trades more difficult than usual.”
* UBS - De-leveraging won’t abate soon.
“The world economy remains broadly on track for recovery. After growing an estimated 4.1 percent in 2010, global growth is expected to moderate to a 3.7 percent pace in 2011 and 3.8 percent in 2012.
“Among developed economies, Japan is expected to slow the most, with growth halving from 3.5 percent this year to 1.4 percent in 2011.
“But some softening is also likely in emerging economies, where growth is expected to decelerate from 6.2 percent in 2010 to 5.6 percent next year before stabilising at 5.7 percent in 2012.
“The lingering constraints of the credit crisis and balance sheet repair, combined with a less-pronounced inventory contribution, suggest that the world economy is unlikely to reduce much of the spare capacity built up during the recession.
“As a result, slack in labour and product markets should only gradually recede, pointing to continued disinflationary forces in broad areas of the world economy.”
* BANK OF AMERICA-MERRILL LYNCH - Bridging the Global Gap
“The key driver of many of the economic, policy and market stories in 2011 is the yawning gap between the ‘advanced’ and ‘emerging’ economies. Specifically, we expect a huge gap in economic fundamentals will continue to create other gaps.
“While economic fundamentals are positive in most emerging markets, banking and real estate crises have created deep and persistent output gaps in the Big Three — the U.S., Japan and Europe.
“We expect trend-like growth in most economies in the year ahead. Such growth is essential to avoiding overheating in the emerging markets, but it means a very slow healing process in the Big Three.
“This gap means a big divergence in inflation trends, with pockets of inflationary pressure in the emerging markets, and either actual (Japan) or serious risk of (U.S. and the euro zone) deflation in the big three economies.
“The gap also means an ongoing policy split, with super-easy monetary policy and large budget deficits in the Big Three, even as emerging economies keep budget deficits under control and tentatively hike interest rates.
“The fundamentals divide and the policy response imply continued strong capital flows into emerging markets and a risk that bubbles emerge in some markets, even as others remain deeply impaired.
“While our baseline forecast is ‘muddle through,’ the chronically unbalanced global economy creates a number of risks, including commodity and asset market bubbles, premature policy exit, and trade and currency tensions.”