Global Economic Outlook 2011 — Key Results

The Conference Board Global Economic Outlook 2011 provides projections of economic growth, measured as changes in Gross Domestic Product, for 2011, 2011-2015, and 2015-2020, for the global economy, the economies of 11 major regions, aggregated advanced economies, and aggregated emerging and developing economies.

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The world economy will grow faster in the second decade of the 21st century than it did in the first.

  • The world economy is expected to grow at 4.4 percent from 2010-2020, about 0.7 percentage point faster than it grew from 2000-2010 — even despite the recession (global growth was 4.1 percent in 2000-2008.)
  • Advanced economies as a group will account for less than 1 percentage point of global growth from 2010-2020; 3.4 percentage points will come from emerging economies. China and India will account for half of global growth from 2010-2020, at 1.7 percentage point and 0.6 percentage point, respectively.
  • World output growth may accelerate slightly during the second half of 2010-2020, if advanced economies move on to a higher growth trajectory fuelled by technology and innovation and related investment growth.
  • Growth in emerging and developing economies in 2010-2020 will be more than three times faster (6.3 percent per year on average) than growth in advanced economies (1.9 percent per year on average). The emerging world's catch-up potential is unlikely to abate before the end of the decade, particularly as these countries' domestic and regional growth dynamics gain in importance.
  • Yet the downside risks for the decade's relatively optimistic global growth projection also rest squarely on emerging economies, especially China and India. A more pessimistic scenario for these economies, which could result from uncontrolled inflation, asset bubbles, or a failure to absorb large fluctuations in capital flows, could reduce global growth for 2010-2020 by almost 2 percentage points.

We are seeing unprecedented shifts in the distribution of global output.

  • The projected acceleration in 2011-2020 global growth is driven less by faster growth in individual sub-regions than by a gradually increasing share of global output on the part of much faster-growing emerging economies. In other words, even if no region were to show growth acceleration, the total growth rate would still accelerate as faster-growing regions increase their share of the global pie.
  • Emerging and developing economies' share of global GDP was about 40 percent in 2000, is 50 percent today, and will reach about 60 percent in 2020.
  • As a result of the global crisis and very divergent growth rates, China may have a larger GDP (converted for differences in relative price levels using purchasing power parities) than the United States by 2012.
  • Between 2000 and 2020, the United States will have lost 8 percentage points in global output (from 23 percent to 15 percent), and the original 15 members of the European Union will have lost as much as 10 percentage points (23 percent to 13 percent).
  • China's share in global output doubled from 8 percent in 2000 to 16 percent in 2010, and will rise to 24 percent in 2020 (all PPP-converted, see Source Notes below). India will also double its share of global output (from 4 percent in 2000 to 8 percent in 2020), but its overall impact on global growth is much smaller than China's.

Global growth will slow somewhat in 2011.

  • The multi-speed growth that has characterized the global recovery in 2010 will likely continue into 2011, as major regions settle onto their respective growth paths. Global growth in 2011 is likely to be about 0.3 percentage point slower than in 2010, mainly due to eroding recovery effects in advanced economies.
  • Growth in the United States will slow by almost 1.5 percentage points (from 2.6 percent in 2010 to 1.2 percent in 2011), due to slower consumer and business spending and a decline in government spending.
  • Western Europe (the original 15 EU member states) will stay at a modest 1.5 percent growth in 2011, but with significant variability. Germany, the Nordic countries and Benelux will perform at the higher end (above 2 percent). The United Kingdom and France will be in the middle range, 1.5-2 percent, due to budget cuts, slower domestic growth and less help from exports. Most of Southern Europe and Ireland will see growth of less than 1 percent, or may even contract.
  • Growth in China will moderate only slightly going into 2011 as its economy settles onto a gradually slowing growth trend, assuming there are no major negative impacts from inflation or overvalued assets.
  • India will add almost a full percentage point to its growth rate in 2011 over 2010, as its economy continues to benefit from accelerating domestic growth, a relatively strong currency, and a non-expansionary macroeconomic policy environment.

Comparison of Base Scenario with Optimistic and Pessimistic Scenarios, 2011 - 2020 (March 2011)

  2010-2015 2015-2020 2010-2020
  Optimistic Scenario Base Scenario Pessimistic Scenario Optimistic Scenario Base Scenario Pessimistic Scenario Optimistic Scenario Base Scenario Pessimistic Scenario
US 2.8 1.8 1.4 3.9 2.5 1.1 3.4 2.3 1.3
EU-15 1.9 1.3 0.7 3.0 1.7 0.5 2.4 1.5 0.6
Japan 1.8 1.0 0.1 3.1 1.5 0.0 2.4 1.3 0.1
Other* 3.7 2.9 2.1 4.0 2.7 1.5 3.9 2.8 1.8
Advanced Economies 2.5 1.8 1.0 3.5 2.2 0.8 3.0 2.0 1.0
                   
China 9.9 9.1 6.0 9.0 7.9 3.9 9.4 8.5 5.0
India 9.2 8.3 5.5 10.4 9.1 4.5 9.8 8.7 5.0
Other developing Asia 5.9 5.1 4.3 7.6 6.0 4.4 6.8 5.5 4.3
Latin America 5.0 4.0 3.0 5.1 3.8 2.5 5.1 3.9 2.8
Middle East 5.0 4.4 3.8 6.7 5.3 4.0 5.8 4.9 3.9
Africa 5.4 4.8 4.2 7.5 5.9 4.4 6.5 5.4 4.3
Central & Eastern Europe 4.5 3.5 2.5 4.1 3.0 2.0 4.3 3.3 2.2
Russia and other CIS 4.4 3.2 1.9 4.3 3.1 2.0 4.4 3.2 2.0
Emerging Market and Developing Economies 7.2 6.3 4.4 7.6 6.3 3.6 7.4 6.3 4.0
                   
World 5.0 4.2 2.8 5.9 4.6 2.4 5.4 4.4 2.6

* Other advanced economies include Canada, Switzerland, Norway, Israel, Iceland, Cyprus, Korea, Australia, Taiwan Province of China, Hong Kong, Singapore, New Zealand
Source: The Conference Board

Source Notes:
The Conference Board Global Economic Outlook draws on a range of sources, including The Conference Board Total Economy Database and U.S. Economic Forecast for 2010 and 2011, and various measures of potential output growth and output gaps for countries and regions, in particular from the Organization for Economic Cooperation and Development and International Monetary Fund. Assessments for 2010 and 2011 are also based on The Conference Board Leading Economic Indexes (LEIs) for the Euro Area, Japan, and China. The long-term projections utilize measures of potential output growth, actual and trend employment growth, and assumptions on total factor productivity. The country and region GDP weights are current weights, which are the average for the beginning and the end of each period, and which are benchmarked on purchasing power parity (PPP)-adjusted GDP from the World Bank/ICP PPP-round for 2005, but with adjustments to reflect global weighting, to change the effect of the net foreign balance using PPP rather than exchange rate, and a downward adjustment of the PPP for China. See Vivian Chen, Abhay Gupta, Andre Therrien, Gad Levanon and Bart van Ark (2010), "Recent Productivity Developments in the World Economy: An Overview from The Conference Board Total Economy Database," International Productivity Monitor, Spring, pp. 3-19.

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