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Economist (December 9)

2010/ 12/ 10 by jd in Global News

A divergence in growth between “the world’s big three” during 2011 may “compound the risks in each one.” In Europe, growth will slow as governments tighten spending. The euro zone will also face continued stress over both its currency and banking model. The U.S. could grow at a rapid 4% thanks to new tax cuts, but face inflationary pressure and even “a bond-market bust” as the deficit soars. Emerging markets will walk a tight-rope between risking inflation by doing too little and dampening growth by doing too much. “Either way, the chances of a macroeconomic shock emanating from the emerging world are rising steeply.” For the record, the Economist still views Japan as “an economic heavyweight,” but believes Japan is less likely to impact the global economy with surprises in 2011.

 

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