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December 14, 2011

Five Economics Predictions for 2012

POLITICS - What are economists saying about 2012? Lets find out.

IHS Global Insight expects global GDP to rise 2.7% in 2012, but they have other predictions as well. In 2010 eight out of 10 of IHS’s predictions proved to be correct.

1) United States recession?

Most economists think the USA will avoid a recession in 2012 and IHS agrees. They're predicting the first half of 2012 to be slow, but to pick up steam half-way through the year. They're expecting the USA's GDP to rise 2.5% by the end of 2012.

2) Europe

Fiscal confidence is plummeting in Europe, suggesting a mild recession in 2012. If Europe's debt problems are not solved however it could be much worse. The IHS is expecting Greece's GDP to drop 6% and Portugal's to drop 3%.

The IHS is predicting Greece might drop the Euro as its currency.

3) Asia

Asia will continue to have the strongest economic growth in the world (around 5.5%). Expect a rebound in post-earthquake Japan that will drive exports. Growth in China is expected to be about 8% or better.

4) Commodity Prices

Prices should stabilize and gold prices may drop. Expect oil prices to drop 30 to 40%. Prices should drop in North America/Europe due to weaker demand, but expect growing demand in China and India.

Geopolitical tensions and oil shortages may cause oil prices to go back up during the Summer of 2012, but not to any record levels unless there is a large war in a country such as Iran.

5) Inflation

Inflation will fall, particularly in North America and Europe. Central banks are unlikely to raise interest rates. In Europe deflation in poorer regions will become a growing concern.

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