World economic growth, which stands at a slow 3.2 percent for 2012, will slow further to 3.0 percent in 2013. Annual global growth will remain at an average of 3.0 percent from 2013-2018 before declining still further to an average 2.5 percent in the period 2019-2025, reveals the Conference Board Global Economic Outlook.
U.S. growth is expected to fall from 2.1 percent in 2012 to 1.8 percent in 2013. A more significant slowdown is expected for less mature economies over the next year - and beyond. Overall, growth in developing and emerging economies is projected to drop from 5.5 percent in 2012 to 4.7 percent in 2013, though these numbers encompass significant regional differences. In Africa, for instance, growth should just barely tick down, from 3.8 percent to 3.7 percent, while the Middle East may see 2012's 5.5 percent growth more than halved, to 2.3 percent. For 2013, the two largest developing economies should fall between these extremes, with growth falling in China from 7.8 to 6.9 percent and in India from 5.5 to 4.7 percent.
There will be 1.3 percent growth in 2013, compared to 1.2 percent in 2012 across the advanced economies. The slight uptick is largely due to the Euro Area, which is expected to return to very slow growth of 0.2 percent after the -0.6 percent contraction in 2012. In Europe, annual growth is expected to average 1.2 percent during 2013-2025, conference Board predicted.
"Mature economies are still healing the scars of the 2008-2009 crisis. But unlike in 2010 and 2011, emerging markets did not pick up the slack in 2012, and won't do so in 2013. Uncertainty across the regions - from the post-election 'fiscal cliff' question in the U.S. to the Chinese leadership transition and reforms in the Euro Area - will continue to have global impacts in sluggish trade and tepid foreign direct investment," said Bart van Ark, Chief Economist of The Conference Board.
The outlook does expect the U.S. and other advanced economies to go some ways toward closing large output gaps - that is, the difference between current output and the level of output an economy can produce in a noninflationary way, given the size of its labor force and its potential to invest in and create technological progress. The current output gap is a result of weak demand due to the 2008-2009 crisis. This development should allow the U.S. to average 2.3 percent annual growth during 2013-2018 before falling to 2.0 percent in 2019-2025. In the same two periods, Japan is expected to grow at 1.1 percent and 0.9 percent, respectively.
Annual growth in China is projected to fall to an average of 5.5 percent in 2013-2018 and 3.7 percent in 2019-2025. The corresponding numbers in India are 4.7 percent and 3.9 percent; in Brazil, 3.0 percent and 2.7 percent. By the middle of the next decade, emerging markets will still substantially outpace advanced economies, but by a much smaller margin compared to the boom years of 2006-2012 - when China, India, and Brazil averaged 10.4, 7.8, and 3.8 percent growth, respectively.
