Deloitte Research: Global Economic Outlook April 2009

Since our last Outlook in January, the financial crisis has deepened and become a truly global recession. Economic activity in the United States, Europe, and Japan has declined at an alarming rate.

Emerging countries in East Asia and Central Europe have experienced sharp drops in economic activity with the latter at risk of further financial turmoil. Even the BRIC economies that at one time seemed relatively immune to the global financial situation, have experienced serious problems. Global trade has plummeted, causing concern that the increasingly global nature of the economy leads to more rapid
transmission of trouble than in the past.

And yet, there are starting to be indications of light at the end of the tunnel. Global shipping rates have stabilized and modestly increased. Risk spreads are far below their level of a few months ago.

And governments have been pumping money into the system at an unprecedented rate.
Still, risks remain. Deflation appears to be rearing its ugly head. The degree to which government action regarding banks will be effective is far from certain. And the specter of protectionism is not far below the surface.

In this issue of our quarterly Outlook, our economists offer their perspective on the global situation.

Carl Steidtmann provides an analysis of the Obama economic plan and a moderately optimistic view of the U.S. outlook. Elisabeth Denison examines the Eurozone economic outlook as well as the limitations on economic policy action within the context of the European Union. Elisabeth also writes about the more long-term issue of demographics and the likely constraints it will impose on policymakers the world over. Ian Stewart looks at the outlook for the U.K. economy, while Sunil Rongala provides outlooks for Japan, China, India, and Russia. In addition, Sunil considers the impact of China’s economic troubles on S.E. Asia. Finally, I provide our outlook for Brazil, as well as an analysis of the troubles in Central and Eastern Europe and their potential impact on the West.

As always, we hope that this Outlook provides useful information for business planning. Moreover, all of our authors welcome feedback.