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World Consumer Goods Outlook 3rd Quarter
The Economist Intelligence Unit, September 2012, Pages: 30
The world's two largest central banks are unleashing an unprecedented wave of stimulus to provide succour to economies that together make up nearly one-half of global output. Within a week in September, the US Federal Reserve and the European Central Bank (ECB) unveiled new programmes to halt mounting risks to their respective economies-for the ECB, the possible break-up of the euro zone; for the Fed, a chronically weak US labour market that has sapped incomes and held back growth. In a sign of their commitment, both central banks pledged to act without limit: the Fed will purchase bonds until it sees evidence of an improvement in the US jobs market, and the ECB stands ready-subject to conditions-to buy as much sovereign debt as necessary to stabilise financial markets on Europe's periphery. These commitments are impressive, especially in the euro zone, where the risk of a full-blown financial crisis has eased. But it is not clear that either central bank will achieve its goal. More importantly, the deployment of this much stimulus at a time when economies should be rebounding from the 2008-09 recession is evidence of the depth of the downturn and the impact of excessive levels of household and government indebtedness.
The Fed and the ECB join a long list of institutions that are easing policy to support growth. Since the start of July, central banks in China, Brazil, South Korea, South Africa, Israel, Colombia and the Philippines have reduced borrowing costs. Along with the recent steps by the Fed and the ECB, these moves should provide some support to the global economy in the closing months of 2012 and at the start of 2013. They will not, however, produce a dramatic turnaround: with economic momentum slowing almost everywhere, central bank injections will do little more than provide a floor for growth. Indeed, the Economist Intelligence Unit has this month lowered its 2012 GDP forecast for China to 7.8% from 8.1%, largely because the government's latest stimulus efforts are taking longer to feed through than we had expected.
With revisions to our forecasts for a number of major economies, our outlook for global growth this year and next has changed, albeit only marginally. We expect the global economy to expand by 2.2% at market exchange rates in 2012, slightly higher than our forecast last month. This is owing in part to an upward revision to growth in Japan, where post-tsunami reconstruction spending is having a more pronounced effect than we had expected. At purchasing power parity (PPP) exchange rates, which give more weight to emerging markets, the global economy will grow by 3.1% this year-well down from the expansion of 3.7% in 2011. China will benefit next year from the stimulus already in the pipeline or imminent, so we have slightly improved our outlook next year for the world's second-largest economy. On balance, however, we expect global growth in 2013 of 3.5% and 2.4% at PPP rates and market exchange rates respectively-in both cases down slightly from last month's forecast. Even with these reductions, the risks to the global economy are still on the downside. Only in 2014 will global growth return to 4% at PPP rates-a moderate showing. At no point within the five-year forecast period will global growth reach 5%, which we would classify as strong, and which would be necessary to begin to have an impact on the high levels of unemployment globally.
Industry List: Consumer Goods, Consumer Goods, Consumer products, Consumer Goods, Food, beverages and tobacco, Consumer Goods, Retailing, Consumer Goods, Trade
Industry Codes (NAIC): 44
Industry Codes (SIC): 53
World Consumer Goods Outlook 3rd Quarter
World growth and inflation
The Fed and the ECB offer unlimited support
We have adjusted our global growth forecasts for this year and next
We are not yet changing our outlook for the US
Economic activity has been weak in most countries
Two major developments have eased pressures in the euro zone
The ECB's bond-buying programme is not a cure-all
The US economy is struggling and the labour market remains weak
The effects of quantitative easing are not well understood
The outlook for the economies of India and Brazi continues to deteriorate
China's manufacturing and trade sectors have suffered in recent months
Emerging economies cannot decouple completely from the US and Europe
World: risk rally?
Coming in threes
Pros and cons
Other questions remain
World consumer goods and retail outlook
World consumer goods and retail outlook: Overview
World consumer goods and retail outlook: Key forecasts
World consumer goods and retail outlook: Retailing
The optimism that abounds in China must be tempered with some caution
Defending domestic markets could mean reining back ambitions elsewhere.
Consumers will remain price-sensitive for commoditised goods such as basic foods and household products.
Many retailers are resorting to a multichannel or omnichannel strategy.
World consumer goods and retail outlook: Food, beverages and tobacco
Emerging-markets are driving growth - but remain fragmented
Shrinking home markets will force big tobacco to widen the net
World consumer goods and retail outlook: Other consumer products
Localised products are key to emerging market growth
World consumer goods and retail outlook: Trade
Despite the revival in the global economy, there are signs of a rise in protectionism.
Commodity prices have been rising strongly
In the medium term, conservation will constrain global consumption
Supply growth is strong, even assuming lower Iranian output
Geopolitical risk is running high
Oil prices are expected to slip into 2013
Signs that China will avoid a hard landing will support metals prices