UH Global Economic Forecast: Asia Leads World Recovery

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‘University of Hawai’i Economic Research Organization’s Economic Information Service provides complete analysis and detailed industry-level forecasts for up to five years. The EIS is a research program of the University of Hawaii at Manoa and depends on financial support from report subscribers and program sponsors. The complete versions of this and other EIS reports are also available for individual purchase. For more information, visit our EIS information page.’



After a deep, synchronized recession, growth is resuming across a broad swath of the global economy. Leading the rebound are the dynamic Asian economies. These countries, which were hit hard by last year’s collapse of world trade, have now seen a return to export-led growth, much of it originating from demand within the region. Growth has also returned to the U.S. and Japan, but the depth of the decline, lost household wealth, and lingering credit problems mean that full recovery will take a number of years.

*This year will mark the first since the 1930s to see a net decline in global output. Next year, real gross world product will rise by 2.5%, with respectable growth in the developing countries offset in part by a weak recovery in the developed world.

*We now have clear evidence that the long, deep U.S. recession has ended. Overall economic recovery will be constrained by weakness in consumer spending. For 2009 as a whole, GDP is expected to decline by 2.5%, rising by 2.4% in 2010. The limited pace of economic growth will not be sufficient to prevent an additional rise in the unemployment rate.

*Japan’s economy has been slowing since the middle of 2007. After expanding at a 3.2% rate in the first quarter, real GDP dropped at a 3% annual rate in the second quarter of this year. On an annual basis, we expect 2008 GDP growth to come in at just 0.3%, and in 2009 the economy will contract by 0.5%.

*European Union economies as a group expanded by 2.8% in 2007, and are expected to show just 1.2% growth for this year, slowing to zero growth in 2009. All major European economies are now in recession, with the most severe downturn occurring in the United Kingdom.

*The Eastern European “new member” countries of the EU expanded by about 5% this year and will continue growing in 2009, albeit at a slower pace. Eastern Europe has not escaped the adverse effects of the global financial crisis. Russia is expected to slow from 7.3% growth this year to 5% growth in 2009.

*Among developing regions, Africa’s growth has held up well this year, expanding at an estimated 5%, down only marginally from 2007. Growth of 4.6% is anticipated in 2009. Commodity prices, which have been a boon for some countries this year, will become a negative factor.

*Latin American economies will slow markedly. Mexico is expected to decelerate from 2% growth this year to 1% in 2009. Brazil is estimated to have grown by more than 5% this year, but will expand at a slower 3% rate in 2009. Oil has fueled Venezuela’s boom in recent years, but cheaper oil will slow growth to 2% in 2009.

*The financial crisis and weaker export demand in rich countries are being felt throughout Asia. South and East Asian economies will generally slow to the 3-4% range in 2009. China is expected to slow from more than 11% growth in 2007 to under 10% this year and 8% in 2009. India’s annual growth is estimated at 7.5% this year and will fall below 7% next year. The Western Asia region will decelerate from 5% to just over 3% growth in 2009.

*Hawai’i’s economy has been buffeted by weakening conditions in the U.S. this year. While lower oil prices are welcome news, the deep U.S. and global downturns will weigh heavily on the tourism industry in 2009.


*Source: UHERO for U.S. and Japan, and United Nations Project LINK Global Economic Outlook, November 2009. Figures for 2009-2010 are forecasts. Detailed forecasts and analysis for major countries and regions are available to subscribers and sponsors.

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