The
first Significant Changes analysis of the year focuses on the 2012 outlook
for Real GDP and Consumer Price Inflation as well as a
first look at 2013 projections for the US, Euro area, Japan, Germany
and the UK. As the chart (right) illustrates, the outlook
for most G-7 economies has worsened noticeably. Indeed, the GDP consensus
for the Euro zone is falling further into negative territory
this month. This follows contagion from the debt crisis in the Euro area
periphery spreading to core countries like France and Italy.
These economies are especially dependent on each other in terms of investment
and trade, hence partly why expectations have deteriorated so quickly. With
GDP forecast to contract this year, the outlook for public indebtedness
has only worsened, further endangering the unity of the European project.
Gross Domestic |
Historical Data | 2013 Forecast | Consensus Forecasts for 2012 from Survey of: | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| * % change on previous year | 2009 | 2010 | 2011 | Aug.'11 | Sep. | Oct. | Nov. | Dec. | Jan.'12 | |
| United States |
-3.5 | 3.0 | 1.8 | 2.5 | 2.4 | 2.1 | 1.9 | 2.1 | 2.1 | 2.2 |
| Euro zone | -4.2 | 1.8 | 1.6 | 1.0 | 1.5 | 1.0 | 0.6 | 0.4 | -0.1 | -0.3 |
| Japan | -5.5 | 4.5 | -0.8 | 1.4 | 3.1 | 2.4 | 2.2 | 2.1 | 2.0 | 1.9 |
| Germany | -5.1 | 3.7 | 3.0 | 1.5 | 1.9 | 1.3 | 1.0 | 0.8 | 0.5 | 0.5 |
| United Kingdom | -4.4 | 2.1 | 0.9 | 1.8 | 2.0 | 1.8 | 1.5 | 1.1 | 0.7 | 0.5 |
Even
Germany, the region’s powerhouse economy, recently contracted
by 0.25% (q-o-q) in Q4, though GDP forecasts have been plunging over the
past six months in anticipation of a marked slowdown. The UK
has also seen a sharp drop in expectations, due to both European turmoil
and the impact of domestic austerity measures. The US and
Japan stand somewhat apart from the trend in European forecasts.
While the Japanese GDP outlook has been weakening gradually over the past
five months, the economy is still projected to expand by just under 2% growth
this year. The rebound follows last year’s earthquake/tsunami disaster.
US estimates, meanwhile, have shown some improvement of
late on the back of firming industrial output and labour market data. So
far, the economy is expected to be one of the G7’s best performers (relatively
speaking) in 2012.
Consumer Price Inflation* |
Historical Data | 2013 Forecast | Consensus Forecasts for 2012 from Survey of: | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| * % change on previous year | 2009 | 2010 | 2011 | Aug.'11 | Sep. | Oct. | Nov. | Dec. | Jan.'12. | |
| United States |
-0.3 | 1.6 | 3.2 | 1.9 | 2.1 | 2.1 | 2.1 | 2.1 | 2.1 | 1.9 |
| Euro zone | 0.3 | 1.6 | 2.7 | 1.7 | 1.9 | 1.8 | 1.8 | 1.8 | 1.8 | 1.9 |
| Japan | -1.3 | -0.7 | -0.3 | 0.0 | 0.2 | -0.2 | -0.2 | -0.2 | -0.2 | -0.3 |
| Germany | 0.4 | 1.1 | 2.3 | 1.8 | 2.0 | 1.9 | 1.9 | 1.8 | 1.7 | 1.8 |
|
United Kingdom |
2.2 | 3.3 | 4.4 | 2.0 | 2.7 | 2.7 | 2.7 | 2.8 | 2.7 | 2.7 |
Taken from G-7 and Western Europe Consensus Forecasts, January 2012.