A Tale of Two Economies

It is the best of times and it is .... at least better than it's been.... Interesting article published by Euromonitor indicates a slight tempering in 2011 of the strong recovery we've been experiencing in recent months. However, global GDP is still expected to grow by 4.4% in 2011.   More significantly, global growth will be running on  two tracks and in two gears.  Developed countries growing slowly or contracting and developing countries growing robustly;  presents some interesting challenges for developing a global strategy. Diverging prospects and challenges characterise the outlook

By Media Eghbal, Countries & Consumers Editor at Euromonitor International World economic growth is set to slow in 2011 as the rebound from the global financial crisis moderates and many governments withdraw unprecedented stimulus measures, but the recovery has been better than expected. Global real GDP growth will be 4.4% in 2011 after 5.0% growth in 2010. Economic growth will slow for both developed and developing economies but the latter will continue to post much higher rates overall in 2011 at 6.5% compared to 2.5% for advanced economies. The world economy faces challenges in 2011. The biggest challenge will be for advanced economies to implement austerity measures without damaging economic growth. Many eurozone members in particular have undertaken fiscal tightening in order to avoid further sovereign risk, but austerity will weigh on consumer and business confidence. High unemployment remains another problem for developed economies while world commodity prices will face upward pressures. Even the better performing emerging markets face the challenges of reduced export demand from advanced economies, the risk of overheating, and the need to rebalance economic growth. Diverging global prospects in 2011 will be reflected in consumer spending potential. Euromonitor International forecasts that real per capita consumer spending in China, for example, will grow by 9.1% in 2011 compared to a contraction of 4.5% in Greece. Inflation is also squeezing disposable incomes in some countries including China, India, Brazil and the UK.