ARLINGTON, Va. — According to a report by the Manufacturers Alliance/MAPI, worries over the U.S. economic outlook, combined with evidence of slowing in other key countries, could indicate that 2008 will be a volatile and uncertain year for the global economy.
Recent housing, manufacturing and job growth data signal that the U.S. economy may have lapsed into a recession. The continued crisis in global credit markets, high oil prices and global inflation are posing risks to the world economy.
“U.S. weakness has a negative impact on the export prospects of many key countries that depend on external demand for growth,” said economist Cliff Waldman.
Exports, however, may be good news for the United States. For 2008, the positive impact of dollar depreciation should partially offset the negative impact of slower growth. Annual growth of total U.S. goods and services exports is expected to rise from 7.7 percent in 2007 to 8.7 percent in 2008 and 9.2 percent in 2009.
Growth in non-U.S. industrialized countries, including Canada, the Eurozone and Japan, is forecast to slow from 2.4 percent on a compound annualized basis during the fourth quarter of 2007 to 2.2 percent during the first quarter of 2008 and then to 1.9 percent from the balance of 2008.
Non-U.S. industrialized country growth is expected to accelerate to 2 percent for the first half of 2009 and to 2.2 percent during the second half.
Expected slowdowns in China, India and Mexico are leading forecasts to indicate a slowing of developing country growth to 5.4 percent during the fourth quarter of 2007 and first half of 2008 to 5.3 percent during the second half of 2008.
In 2009, growth is expected to slow to 5.2 percent in the first half, 5.1 percent in the third quarter and then 5 percent in the fourth quarter.
MAPI also expects the dollar adjustment to continue throughout 2008.
The dollar is expected to decline by 8 percent on a compound annual basis against the currencies of industrialized trading partners during the first quarter of 2008 and by 5 percent during each of the remaining three quarters.
Against currencies of developing countries, the dollar should decline by 6 percent during the first quarter of 2008, 10 percent during each of the middle two quarters and then 5 percent during the fourth quarter.
“U.S. economic troubles and a rebalancing of global current accounts will place downward pressure on the dollar throughout 2008,” Waldman said.