Econintersect: An overview of the global economic condition by BlackRock Investment Institute (BII), in a report titled ‘The Year of Living Divergently’, says 2012 China and India will combine to provide more than half of the world’s economic growth in 2012. Overall BII sees a slow growth world in which the U.S. will face headwinds and Europe will likely slip into recession while avoiding more dire financial contagion. The expectation is that, though growth will be slow for the U.S., it will remain positive for the entire year.
The emerging markets countries will provide most of the growth in 2012, led by Chindia (China and India). The two countries will likely see slower growth in 2012 than in 2011. China will lead the way with 40% of global growth and India and the U.S. will each contribute about 15%, according to Black Rock.
From the Times of India, with quotes from Robert C Doll, chief equity strategist for fundamental equities at BlackRock:
Until recently, increasing inflation in emerging markets has caused policymakers to raise interest rates and/or reserve requirements in an attempt to slow inflation , with the effort of dampening growth. We expect that process will begin to reverse itself sometime in 2012,” it further said. According to Doll, the most significant global risk remains the financial breakdown in Europe, which would tip the entire developed world, if not the emerging world, into a new recession.
“In 2012, the big swing factor for world economy will be success of continuing effort to fix Europe’s debt and credit issues ,” Doll said. “Failure to advance this effort could be disastrous.”