The European Forecasting Network has released its quarterly report on Euro area economy, with the latest projected GDP growth rate for 2012 now standing at 0.3%. In the scenarios explored by the research, major insolvencies of banks and countries are avoided through political will to defend the common currency.
Exports and industrial production will not grow as much as previously thought and world trade is only expected to grow by 4% – as opposed to the expected 6%.
Italy and Spain will continue to struggle under high rates on sovereign bonds. The cost of business and consumer borrowing will rise as the European Central Banks makes more stringent demands for banks to hold capital.
Unemployment is currently at 10.3% in Europe and consumption is expected to remain modest throughout the European Winter. However, exports are expanding at a “healthy” pace.
The EFN expects inflation to hold at 1.8% in 2012 and at 1.3% in 2013. Worldwide inflation is also expected to calm down. The liberation of Libya has been a positive factor for Europe, ensuring that oil prices remain steady and do not spark inflation. Interest rates are expected to remain close to 0 for most of 2012.
The report points to two main risks for the world economy – a slowdown in the Chinese economy caused by a busting property bubble, and the confidence crisis in Europe. The bleak outlook in the report makes no room for large shocks to the European economy on the scale of that experienced by Japan after the catastrophic earthquake of 2011.
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In This Story: Japan
Japan is divided into 47 administrative prefectures and eight traditional regions. The Greater Tokyo Area is the most populous metropolitan area in the world, with more than 37.4 million residents.
Japan is a great power and a member of numerous international organizations, including the United Nations (since 1956), the OECD, and the G7. Japan is a leader in the automotive and electronics industries.
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In This Story: Libya
Libya, officially the State of Libya, is a country in the Maghreb region in North Africa, bordered by the Mediterranean Sea to the north, Egypt to the east, Sudan to the southeast, Chad to the south, Niger to the southwest, Algeria to the west, and Tunisia to the northwest.
The sovereign state is made of three historical regions: Tripolitania, Fezzan and Cyrenaica. The largest city and capital, Tripoli, is located in western Libya and contains over three million of Libya’s seven million people. The second-largest city is Benghazi, which is located in eastern Libya.
Libya became independent as a kingdom in 1951. A military coup in 1969 overthrew King Idris I. Parts of Libya are currently split between rival Tobruk and Tripoli-based governments, as well as various tribal and Islamist militias.
Libya is a member of the United Nations (since 1955), the Non-Aligned Movement, the Arab League, the OIC and OPEC. The country’s official religion is Islam, with 96.6% of the Libyan population being Sunni Muslims.