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Six years past the trough of the Great Recession, the aura of crisis still haunts the global economic landscape and world economic gains are expected to remain sluggish through the end of 2016, according to a recent report.
In a MAPI Foundation Global Outlook, Cliff Waldman, director of economic studies, writes that even in the U.S. where economic activity has been stronger and more stable than in most parts of the world, things are still shaky as frustrations continue to mount over the historically slow pace of growth. Still, the U.S. economy is the relatively healthy player in a weak world.
Various other regions, though, are rife with distinct challenges.
“China's slowdown, thankfully not a hard landing, has been more protracted than many expected," Waldman said. "The recent data from the Eurozone, while a bit stronger, are being pushed into the background amidst the seemingly endless effort to resolve the Greek debt crisis. The Latin American economy has lapsed into a sluggish malaise with the emerging realization that fundamental reforms will be necessary if the region is to ever achieve sustainable prosperity."
Aggregate GDP growth in non-U.S. industrialized countries, which include Canada, the Eurozone, Denmark, the United Kingdom, Sweden, and Japan, is predicted to be only 2.3% by the fourth quarter of 2016, significantly below the 3% to 3.5% range that is the norm for a period of global expansion.
Similarly, developing country growth is expected to reach only 4.5% by the end of 2016, well below the normal range of 5% to 5.5%.
"With subpar non-U.S. global growth and global deflation jitters likely to persist through 2015 and at least part of 2016, the strong dollar / low oil price combination will frame world economic developments over the short term," Waldman predicted. "For the time being, global challenges will remain a headwind to strong and stable U.S. manufacturing growth."