Just when you thought global economies have finally snapped out of the slumber induced back in 2008, the long-awaited growth spurt seems to be proving more elusive than expected. But in a strange turn of events, the BRIC economies that had been the saving grace of 2008-09, are now the culprits behind subdued growth forecasts.
McKinseys monthly Economic Conditions Snapshot, June 2013 has highlighted that global executives expect growth to plateau in coming months. Citing geopolitical instability, economic volatility and sovereign-debt defaults, a higher proportion of respondents to the survey have lowered expectations for global growth than in the previous months survey.
Respondents may well be taking cue from recent reports by the World Bank (WB), Fitch Ratings and other international monitors. Earlier this month, the WB cited "deeper-than-expected recession in the euro area and muted growth in developing countries," while cutting its global growth forecast for the ongoing year to 2.2 percent from 2.4 percent predicted in January.
The lowered global growth forecast by the WB factors 7.7 percent GDP growth for China, compared to its own prediction of eight percent announced at the beginning of the year. And therein lies the debacle, as in the days following the release of the WB report, Chinese policymakers have all but accepted that the Asian dragon will miss its GDP growth target of 7.5 percent for this year.
The Global Economic Outlook report for June by Fitch Ratings also told a similar tale. That report has cut its 2013-14 growth expectations for all four BRIC nations. It has also asserted that growth in China will remain subdued through next year, as it has predicted just seven percent expansion in that countrys national income for 2015.
International observers are still unsure about the EUs prospects in coming months, much as they are coy on their forecasts for emerging economies. The US economy appears as a lone star, as growth there is expected to beef up in the coming months. Whether a flimsy two percent US growth, excepted by WB, will be able to pull up the world from growth plateau, is another matter.
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