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Top 10 Economic Predictions for 2010: Emerging Markets Will Outpace Developed Economies
U.S. faces slow start to economic recovery; Europe, Japan to bounce back more slowly than U.S., says IHS Chief Economist Nariman Behravesh
Nariman Behravesh, chief economist for IHS Global Insight, comments on the September 2009 USA Today/IHS Global Insight Economic Outlook Index in this video posted September 25, 2009. More on the index at www.economicoutlook.usatoday.com.
Lexington, MA — December 10, 2009 — 'Tis the season for predictions about how the year ahead is shaping up, and IHS Chief Economist Nariman Behravesh is first up with his "Top 10 Economic Predictions for 2010."
His quick take on what the New Year holds in store: Global GDP will grow only 2.8 percent in 2010, much better than the 2.0 percent drop in 2009, but well below the 3.5-4.0 percent trend rate of growth for the world economy. Most emerging markets, particularly Asia, will outpace the developed economies next year, Behravesh believes, while the U.S. economic recovery will begin the year slowly, and Europe and Japan will rebound even more slowly.
Behravesh and experts at IHS Global Insight, which offers economic and financial analysis and forecasting, utilize proprietary economic models developed over more than 45 years to develop the annual list of Top 10 Economic Predictions. Here's a look at what they see coming up next year:
1. The U.S. Recovery Will Start Slowly. IHS Global Insight expects U.S. growth to be stuck in a 2.0-2.5 percent range for much of 2010. While housing and capital spending on equipment are expected to show respectable gains, with consumer spending rising just 1.8 percent, stronger gross domestic product (GDP) growth will be impossible. One of the biggest drags on spending by households will be the unemployment rate, which should move up to around 10.5 percent during the first quarter.
2. Europe and Japan Will Rebound More Slowly than the United States. Europe and Japan suffered through deeper recessions than the United States and are likely to see more modest recoveries. The Eurozone and the U.K. economies are expected to grow 0.9 percent and 0.8 percent, respectively, in 2010. Some West European economies — Iceland, Ireland and Spain — will continue to contract next year as the aftershocks of the housing bubbles and financial crises take their toll. Japan, on the other hand, will do better, with GDP growth of 1.4 percent.
3. Most Emerging Markets — Especially in Asia — Will Outpace the Developed Economies. Growth in all the emerging regions will recover in 2010 and, with the possible exception of "Emerging Europe," will outpace the United States, Europe and Japan. Non-Japan Asia will be at the forefront with GDP growth of 7.1 percent. Latin America, the Middle East and Africa will see gains in the 3-4 percent range. The laggard will be "Emerging Europe," which will expand only 1.7 percent.
4. Interest Rates in the G8 Economies Will Remain Very Low. While some central banks (notably in Australia, Israel and Norway) have already started to raise interest rates, the Federal Reserve, European Central Bank, Bank of England and the Bank of Japan are unlikely to raise rates before the third quarter of 2010. Nevertheless, some Asian central banks, notably the Reserve Bank of India and the People's Bank of China, may pull the trigger sooner — in the first or second quarters.
His quick take on what the New Year holds in store: Global GDP will grow only 2.8 percent in 2010, much better than the 2.0 percent drop in 2009, but well below the 3.5-4.0 percent trend rate of growth for the world economy. Most emerging markets, particularly Asia, will outpace the developed economies next year, Behravesh believes, while the U.S. economic recovery will begin the year slowly, and Europe and Japan will rebound even more slowly.
Behravesh and experts at IHS Global Insight, which offers economic and financial analysis and forecasting, utilize proprietary economic models developed over more than 45 years to develop the annual list of Top 10 Economic Predictions. Here's a look at what they see coming up next year:
1. The U.S. Recovery Will Start Slowly. IHS Global Insight expects U.S. growth to be stuck in a 2.0-2.5 percent range for much of 2010. While housing and capital spending on equipment are expected to show respectable gains, with consumer spending rising just 1.8 percent, stronger gross domestic product (GDP) growth will be impossible. One of the biggest drags on spending by households will be the unemployment rate, which should move up to around 10.5 percent during the first quarter.
2. Europe and Japan Will Rebound More Slowly than the United States. Europe and Japan suffered through deeper recessions than the United States and are likely to see more modest recoveries. The Eurozone and the U.K. economies are expected to grow 0.9 percent and 0.8 percent, respectively, in 2010. Some West European economies — Iceland, Ireland and Spain — will continue to contract next year as the aftershocks of the housing bubbles and financial crises take their toll. Japan, on the other hand, will do better, with GDP growth of 1.4 percent.
3. Most Emerging Markets — Especially in Asia — Will Outpace the Developed Economies. Growth in all the emerging regions will recover in 2010 and, with the possible exception of "Emerging Europe," will outpace the United States, Europe and Japan. Non-Japan Asia will be at the forefront with GDP growth of 7.1 percent. Latin America, the Middle East and Africa will see gains in the 3-4 percent range. The laggard will be "Emerging Europe," which will expand only 1.7 percent.
4. Interest Rates in the G8 Economies Will Remain Very Low. While some central banks (notably in Australia, Israel and Norway) have already started to raise interest rates, the Federal Reserve, European Central Bank, Bank of England and the Bank of Japan are unlikely to raise rates before the third quarter of 2010. Nevertheless, some Asian central banks, notably the Reserve Bank of India and the People's Bank of China, may pull the trigger sooner — in the first or second quarters.
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