The Conference Board Governance Center Blog

Nov
08
2011

Global Growth to Lose Momentum; Emerging Economies Will Account for Much of the Slowdown

World growth will slow to about 3 percent per year on average, until at least the middle of the next decade, The Conference Board reports today.

Global growth is projected to grow at 3.2 percent in 2012, accelerate to 3.5 percent from 2013-2016, and then show a further slowdown to 2.7 percent from 2017-2025, according to The Conference Board Global Economic Outlook. The report provides projections for output growth of the world economy for 2012, 2013-2016, and 2017-2025, including 12 major regions and about 50 advanced and emerging economies.

At 3 percent, on average, global growth will still be somewhat higher than the period 1980-1995, but between half and a full percentage point below the growth rate from 1995-2008. A recovery in advanced economies will be more than offset by a gradual slowdown in emerging ones as they mature, with the net result being that global growth will slow.

The report notes, however, that the biggest risk ahead for the global economy is not overall slower growth in output, but a slowdown in average output per capita, which will determine how fast living standards can be supported and raised.

“The greatest challenge for the global economy in this slow growth environment is to raise productivity without losing job opportunities for the millions who are looking for reasonably paid jobs to support their living standards,” says Bart van Ark, Executive Vice President and Chief Economist of The Conference Board. “The growth rate of per capita income globally has been around 2.4 percent since the beginning of the century, but sometime between 2017 and 2025, this rate will fall below 2 percent. In contrast to the past half century, that slowdown will also be accompanied by slower growth in population.”

Other key findings:

Advanced economy growth is expected to slow down from an already meager 1.6 percent in 2011 to 1.3 percent in 2012. For 2013-2016, the outlook suggests some recovery in advanced economies, bringing these countries back to the pre-recession growth trend of a little more than 2 percent.

In 2012, emerging economies will slow in growth by 1.3 percentage points on average, going from 6.4 percent growth in 2011 to 5.1 percent in 2012, partly as a result of slower export growth and partly because several of them have been growing above trend. From 2017-2025, emerging and developing countries are projected to grow at 3.4 percent. Many economies will begin to show signs of maturing, at which point the rapid catch-up growth abates.

To view The Conference Board Global Outlook for 2012:

http://www.conference-board.org/data/globaloutlook.cfm



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