A new forecast from the National Institute of Economic and Social Research (NIESR) predicts that the world economy will continue to expand vigorously, growing by 5.0% in 2007 and by 4.8% in 2008.
The strong upturn is expected to continue over the next few years, with world GDP increasing by 4.8% in 2008 and growth averaging 4.4% in the next five years to 2013.
Last year the Euro area grew by 2.7%, the fastest since 2000, as Germany and Italy both staged a strong recovery.
However, European GDP growth will slow to 2.9% in 2007 and 2.5% in 2008, whilst American GDP growth will slow to 2.9% in 2007 and 2.5% in 2008.
Japanese growth is expected to pick up to 2.4% in 2007 and 2.5% in 2008, with NIESR saying that both the Euro area and Japan will perform better in the second half of the decade than in the first half because of supply-side improvements.
NIESR adds that the Euro Area’s recovery in the second half of the decade will rely on improved productivity growth, whilst Japan’s will come mainly from smaller reductions in total hours worked as the employment rate rises and average hours worked stop declining.
| Summary Of The forecast – World Economy Percentage Change, Year-on-Year |
| |
Real GDP |
Consumer Prices* |
World Trade** |
| 2006 |
5.3 |
2.2 |
9.2 |
| 2007 |
5 |
1.9 |
6.8 |
| 2008 |
4.8 |
2.2 |
6.5 |
| *OECD countries **Volume of total world trade |
The managing director of the International Monetary Fund (IMF), Rodrigo de Rato, recently predicted that the global economy will remain robust throughout 2007, with the IMF expecting that global growth will remain solid in 2007, approaching 5% (see IMF Predicts Robust Global Economy For 2007).
Meanwhile OPera Media also forecast that global economic growth will remain robust in 2007, at 4.9%, although it added that inflationary pressure in advanced economies is the key downside risk to this forecast (see Global Economic Growth To Remain Robust In 2007).
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