Long-Term Economic Forecasts

LONG-TERM ECONOMIC FORECASTS

In addition to their annual forecasts, we regularly ask our country panellists to provide longer-term forecasts for the next 5 to 10 years. We undertake these special surveys across our publications Consensus Forecasts, Asia Pacific Consensus Forecasts, Latin American Consensus Forecasts and Eastern Europe Consensus Forecasts twice a year and the resulting tables and analysis are displayed in both the hard-copy and PDF versions of the publications.

Long-term forecasts are updated every April and October (in Consensus Forecasts, Asia Pacific Consensus Forecasts and Latin American Consensus Forecasts) and March and September (in Eastern Europe Consensus Forecasts) for each of the countries listed below.

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The table below shows a portion of the data from one of our surveys for Long-Term forecasts in Germany (from our October 2009 Consensus Forecasts survey) and the text below is taken from the same source.

¹ Signifies average for period.

Long-Term Forecasts in the G-7 and Western Europe coincide with a modest turnaround in activity following 12 horrendous months of financial and economic meltdown. Latest data suggest that many countries are already starting to emerge from recession, but the depth of the downturn has been such that GDP forecasts for 2009 continue to register sharp falls for all countries surveyed. Moreover, it will take time before most growth rates return to pre-crisis levels. 2010 GDP forecasts for Germany, France, the UK, Italy, the Euro zone, Netherlands, Spain and Switzerland, for example, suggest that activity will remain below 1.5%. Indeed, Spain’s economy will continue contracting next year. By contrast, the US, Canada and Norway are expected to recover more strongly. Norwegian activity is helped by its role as an oil exporter. US GDP growth should hit 2.6% next year before surging to 3.3% in 2012 and remaining above 2.5% for the foreseeable horizon (Canadian growth reflects an equally upbeat outlook). This goes against some earlier expectations of a drawn-out economic depression in the US. A revival in productivity on the back of the current cycle of massive job layoffs may help to boost the growth trend, although upbeat GDP forecasts belie downside risks to the US outlook, as evidenced by the huge current account deficit. This underscores the country’s weighty private debt burden, and is forecast to widen to 2012-13 after unwinding briefly this year on the back of a weaker US$ and resulting boost to exports. On the government side, the size of recent fiscal stimulus measures has the potential to weigh on activity going forward as the deficit will take years, if not decades, to pay down. Japanese and European GDP expectations over the next 5-10 years, in contrast with the US, are much more subdued, reflecting structural challenges like an aging workforce and sizeable pensions overhang which will intensify as the baby-boom generation approaches retirement. Consumer prices in Japan, meanwhile, will remain deflation-prone through to 2011; by contrast, the UK will see the strongest inflation impetus.

A portion of text from Consensus Forecasts October 12, 2009

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