ARLINGTON, Va. -- The U.S. recession and financial crisis are having an impact on near-term prospects for economic growth in key industrialized regions, such as Canada, the Eurozone and the United Kingdom, according to a report by the Manufacturers Alliance/MAPI.
''The mixture of considerable short-term U.S. weakness, and a world economy whose strengths have grown with the evolution of new and dynamic markets, has created a cloudy outlook, the likes of which the forecasting community has not confronted in decades,'' Manufacturing Alliance/MAPI economist Cliff Waldman said. ''Most likely, in the absence of further financial shocks, accommodative but stable monetary policies by key central banks should produce a period of slower, but stable world growth.''
As weaker global growth and a weaker dollar offset each other, U.S. export growth in 2008 is expected to remain essentially unchanged from 2007 at 8.1. Stronger growth in the industrialized countries outside the U.S., along with the weaker dollar, will accelerate export growth to 8.7 percent in 2009.
Growth in non-U.S. industrialized countries will be a weak 1.8 percent from the second quarter of 2008 through the end of the year. If the U.S. economy recovers as anticipated, growth should accelerate to 2 percent for the first half of 2009 and then to 2.2 percent for the second half.
Based on the likelihood of a modest but stable slowdown in the Chinese economy, MAPI expects aggregate GDP growth in developing countries will slow from 5.4 percent during the second quarter of 2008 to 5.2 percent during the second half of 2008. It will further decelerate to 5.1 percent during the first half of 2009, 5 percent during the third quarter of 2009 and 4.9 percent during the fourth quarter.
Waldman expects the dollar to decline by 3 percent on a compound annual basis against the currencies of industrialized trading partners during the second, third and fourth quarters of 2008. As the U.S. economy rebounds in 2009, the dollar will experience a 2 percent decline during the first quarter, a flat performance during the second and third quarters, and a 2 percent appreciation during the fourth quarter.
Against the currencies of the developing countries, MAPI expects a decline of 10 percent during the second and third quarters of 2008 and a 5 percent decline during the subsequent three quarters. There will be a 3 percent decline in the third quarter of 2009 and a flat performance during the fourth quarter.
''The much welcome appreciation of East Asian currencies highlights one potential legacy of the current period of economic uncertainty and financial turmoil,'' Waldman added. ''which is greater stability in global current accounts and stronger global financial stability over the long run.''
For more information, visit http://www.mapi.net.