Wachovia’s Special Commentary: Global Chartbook – January 2008

Global Growth Should Slow to Trend in 2008

 

Global real GDP growth averaged 5% per annum between 2004 and 2006, the strongest three-year period of growth in decades. Rising inflation rates led to a tightening of macroeconomic policies over the past few years, which caused some deceleration in global economic activity in 2007. In addition, dislocations in credit markets caused by the subprime mortgage debacle in the United States appear to have weighed on growth rates in many economies at the end of 2007. Looking forward, we project that global growth will slow to its long-run average in 2008. Growth rates in many major economies may be sluggish this year. However, economic activity in many developing countries, which are less affected by dislocations in credit markets than their major economy counterparts, should remain rather solid.

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Global Growth Should Slow to Trend in 2008

 

Global real GDP growth averaged 5% per annum between 2004 and 2006, the strongest three-year period of growth in decades. Rising inflation rates led to a tightening of macroeconomic policies over the past few years, which caused some deceleration in global economic activity in 2007. In addition, dislocations in credit markets caused by the subprime mortgage debacle in the United States appear to have weighed on growth rates in many economies at the end of 2007. Looking forward, we project that global growth will slow to its long-run average in 2008. Growth rates in many major economies may be sluggish this year. However, economic activity in many developing countries, which are less affected by dislocations in credit markets than their major economy counterparts, should remain rather solid.
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