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E-mailLondon, 19 May 2010
Key changes since April 14th 2010: Extraordinary measures have calmed the fiscal crisis in the euro area, but the risk of turbulence remains, and the Economist Intelligence Unit forecasts an eventual restructuring of Greece's debt, probably in 2012 when financial markets will be better prepared.Highlights
• Fiscal consolidation has become the main policy focus in the euro area, and this will be partly offset by the gain in competitiveness from the depreciation of the euro. We have therefore made a slight revision to our forecast for euro area GDP growth, to 0.7% (previously 0.8%) in 2010 and 0.8% (previously 0.9%) in 2011.
• Concerns about the fiscal sustainability and, indeed, the coherence of the euro area will continue to persist. The European Central Bank will now keep interest rates low until the third quarter of 2012 (instead of the fourth quarter of 2011, as previously expected). As a result, we have substantially revised our currency forecast for the euro, to US$1.30 in 2010 and US$1.22 in 2011.
• Indicators for the US and some emerging markets have continued to be strong, so that we have raised our forecast for US GDP growth to 3.3% (2.8% previously) in 2010. The stronger momentum will also help the economy to withstand the withdrawal of stimulus next year, although we still expect a substantial slowdown, to 1.8% (1.6% previously) in 2011. Our global forecast for 2010 rises to 3.1% (previously 2.9%) at market rates and to 4.1% (previously 3.9%) at purchasing power parity (PPP).
• We have raised our forecast for oil prices slightly, to US$80/barrel in 2010 and US$79/b in 2011. This will contribute mildly to inflationary pressures, which otherwise will remain low, at least in much of the developed world, owing to ample spare capacity.
Ends --
The Economist Intelligence Unit's forecasts are featured in the Global Forecasting Service, a new website that provides businesses with reliable projections for the global economy over a five-year period. The service also includes forecasts for commodity prices, exchange rates and world trade, and analysis of the main risk scenarios facing the global economy.
Robin Bew, Editorial Director at the Economist Intelligence Unit said: "The new Global Forecasting Service is the first in an exciting new generation of online services that will help organisations get a clearer picture of the world around them. We are particularly pleased that this new site allows us to offer subscribers our forecasts in a variety of formats, from traditional text-based reporting to interactive charts, video and webinars." More information on the Global Forecasting Service can be found at:
