Executive Briefings

Dutch Bank Finds that Slower Global Growth Appears Likely

Recent evidence suggests that the global economy has continued to regain momentum following a soft patch during the summer. However, says a report from ABN AMRO, the Dutch state-owned bank, there are rising risks from the turmoil in the Middle East and North Africa, which are pushing up oil prices, and to a lesser extent from Japan's disaster. Even if these risks do not fully materialize, slower global growth seems likely on the back of monetary tightening in emerging markets and fiscal consolidation in Europe.

Middle East: Over the past months, popular revolts in Tunisia and Egypt have triggered protests elsewhere in the region, including in net oil-exporting countries. The interruption of Libyan oil exports and fear of further disruptions in oil production have accelerated the rise in oil prices. Although our base scenario does not assume further oil disruption, the unrest will continue to pose risks for the region's prospects and the global economy.

Asia: Economic expansion is expected to ease further in emerging Asia, though growth will most probably remain quite elevated.

Meanwhile, inflation is becoming a challenge for the monetary authorities in the region.

Emerging Europe: The recovery is continuing and is becoming more broad based, although projected growth rates remain below their pre-crisis levels. Inflation is clearly on the rise, driven by higher commodity prices and strengthening domestic demand.

Central banks have cautiously started raising policy rates over the past few months, although they are also relying on other tightening measures to contain the risks attached to higher capital inflows.

Latin America: Higher income will result in a substantial rise in import demand, but strong export demand from Asia will prevent a major deterioration in the current account deficit.

The complete report (and many others, in English) are available at:

http://www.abnamro.nl/nl/zakelijk/service/publicaties/economisch_bureau.html.

Source: ABN AMRO

Recent evidence suggests that the global economy has continued to regain momentum following a soft patch during the summer. However, says a report from ABN AMRO, the Dutch state-owned bank, there are rising risks from the turmoil in the Middle East and North Africa, which are pushing up oil prices, and to a lesser extent from Japan's disaster. Even if these risks do not fully materialize, slower global growth seems likely on the back of monetary tightening in emerging markets and fiscal consolidation in Europe.

Middle East: Over the past months, popular revolts in Tunisia and Egypt have triggered protests elsewhere in the region, including in net oil-exporting countries. The interruption of Libyan oil exports and fear of further disruptions in oil production have accelerated the rise in oil prices. Although our base scenario does not assume further oil disruption, the unrest will continue to pose risks for the region's prospects and the global economy.

Asia: Economic expansion is expected to ease further in emerging Asia, though growth will most probably remain quite elevated.

Meanwhile, inflation is becoming a challenge for the monetary authorities in the region.

Emerging Europe: The recovery is continuing and is becoming more broad based, although projected growth rates remain below their pre-crisis levels. Inflation is clearly on the rise, driven by higher commodity prices and strengthening domestic demand.

Central banks have cautiously started raising policy rates over the past few months, although they are also relying on other tightening measures to contain the risks attached to higher capital inflows.

Latin America: Higher income will result in a substantial rise in import demand, but strong export demand from Asia will prevent a major deterioration in the current account deficit.

The complete report (and many others, in English) are available at:

http://www.abnamro.nl/nl/zakelijk/service/publicaties/economisch_bureau.html.

Source: ABN AMRO