Economic Views, Global December 2011

View from the top

Three years after the onset of the global financial crisis the anticipated economic recovery in 2011-12 has been put on hold in most advanced economies. At the same time, developing economies have taken the lead in driving forward global economic growth. In this edition of Global Economic Views we set out five key themes that we believe will dominate the economic outlook for 2012 and will have implications for the wider business community.

Five key trends to look out for in 2012

  • Next year is likely to see the continuation of uncertainty which will breed market volatility and exert pressure on the currencies of ‘weak’ emerging economies.
  • The lack of a holistic plan to deal with the Eurozone crisis means that the ‘unthinkable’ – a Eurozone break-up – remains a possibility.
  • A vacuum in global leadership is appearing at a time when it is needed most, casting a shadow on the timing of the recovery.
  • On the brighter side, there will be significant business and trade opportunities arising in emerging markets.
  • The combination of relative Middle East stability, low global economic growth and a weak dollar is likely to exert a downward pressure on oil prices in 2012.

Key opportunities

Key threats

  • Emerging market economic growth
  • Affluent consumers in developing economies
  • Stable oil prices
  • Trade opportunities in China, India, South Korea and other stable emerging economies
  • A Eurozone break-up
  • Heightened market volatility
  • Policy uncertainty
  • Capital outflow from risky emerging economies and vulnerable European countries