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World economies will grow as U.S. slows (economists predict..)
AP on Yahoo ^ | 12/15/06 | Malcolm Foster - ap

Posted on 12/15/2006 12:29:52 PM PST by NormsRevenge

BANGKOK, Thailand - A slowdown in the U.S. economy will likely drag on global growth next year, economists predict, but Asia and Europe are expected to remain fairly resilient amid signs of healthy consumer demand.

Even as a cooling U.S. housing market weakens Americans' appetites for foreign-made electronics, clothing and other exports, the swelling ranks of middle-class consumers in China, India and the rest of emerging Asia are seen picking up the slack, experts say.

Europe's growth may also slow some, but the outlook there is also relatively positive due to renewed consumption and falling unemployment.

"While the world's other major economies will be affected by slower U.S. growth, their own domestic demand should continue to drive global growth," Swiss investment bank UBS said in its year-end outlook for the global economy.

Global growth as a whole is projected to slow a tad to 4.9 percent next year from an estimated 5.1 percent this year, the International Monetary Fund predicts.

The world's richer, more mature economies will see lower growth rates. The Organization for Economic Cooperation and Development has trimmed its 2007 growth forecast for its 30 mainly industrialized member countries to 2.5 percent — the lowest rate since 2003 — from its previous estimate of 2.9 percent.

The big question is whether the U.S. economy will slow gradually while avoiding a jump in inflation — something economists call a "soft landing" — or slide into a recession, which could seriously stifle global growth.

"We think it will be a soft landing," said Dong Tao, chief regional economist at Credit Suisse in Hong Kong. And as U.S. export demand slows, "Asia's growth will be more moderate."

"But the rest of the world is starting to pick up the slack," he said. "That will make domestic demand determine the winners and losers."

Consumers in the U.S. and around the world should get some relief from soaring oil prices, which have dropped more than 20 percent since hitting a record high $78 a barrel in July.

U.S. gross domestic product will likely expand by 2.5 percent in 2007, down from an expected 3.3 percent this year, according to according to a panel of 50 top forecasters in a survey released in November by the National Association for Business Economics.

India and China will remain star performers in the year ahead, although both countries face challenges ranging from environmental degradation to the risk of overheating.

China's booming economy is expected to keep growing at more than 10 percent a year. But Beijing faces a tricky balancing act of fostering growth to lift millions out of poverty while trying to clamp down on excessive investment in property development that authorities worry could make banks and companies vulnerable to a financial crisis.

Attempts to restrain investment — two interest rate hikes and measures to curb lending — have had only limited impact.

Chinese officials recently set an 8 percent growth target for 2007, well below the 10.7 percent rate recorded for the first nine months of this year. But growth has topped the targets every year in this decade.

In India, Prime Minister Manmohan Singh has set an ambitious 9 percent annual growth target for the economy over the next five years, up from the current expansion rate of 8 percent, hoping to reduce poverty among the country's 400 million rural poor, who haven't benefited from the country's rapid development.

Singh says boosting productivity in agriculture and channeling more investment into infrastructure projects and job creation are the keys to accelerating growth.

Japan, Asia's largest economy, is steadily recovering from a decade of stagnation. However, consumer spending appears to be weakening, leaving the economy vulnerable to slowing demand for exports, its traditional source of growth.

A critical factor will be when the Bank of Japan next raises interest rates. A move is expected in early 2007. The central bank raised rates in 2006 for the first time in six years to 0.25 percent from virtually zero. Some worry that hiking rates again too soon will choke the recovery.

European growth appears to be on an upswing, but that could be dented some by the expected U.S. slowdown.

Forecasts by the European Union and European Central Bank see gross domestic product in the 12-nation euro zone expanding 2 percent next year, slower than the 2.7 percent expected this year, but well above the 1.4 percent it has averaged since 2001.

"The euro zone can actually cope with a temporary downturn in the U.S. if activity stays dynamic in emerging markets — which seems to be the case for the time being," said Gilles Moec, a London-based economist with Bank of America.

Central and Eastern Europe, combined with Asia, have contributed twice as much as the United States to euro-zone export growth over the past seven years, according to Bank of America.

The only major drag for Europe appears to be Germany, which is expected to take a hit in the first quarter after a hike in its value-added tax.

Latin American economies are expected to do well next year. The region is a big exporter of commodities such as copper, iron ore and soy, so any global economic shocks — like an unexpected slump in China — would have severe repercussions.

Brazil's growth is seen accelerating to 3.4 percent next year after an estimated 3 percent this year. President Luiz Inacio Lula da Silva has managed to bring inflation down to 3.2 percent, something almost unthinkable just a few years ago.

Mexico is expected to grow 3.7 percent next year, down from 4.7 percent this year. But inflation has dropped to a record low, the nation's currency is stable and nearly 1 million jobs have been created in the nation's formal sector.

Argentina is expected to continue its strong comeback after its economic meltdown in 2002, with experts predicting GDP growth of 7 percent next year. Construction is booming, soy exports are up, and unemployment is below 10 percent after reaching a record-high of 21.5 percent in 2003.

____________

AP Business Writers Elaine Kurtenbach in Shanghai, Rajesh Mahapatra in New Delhi, Hans Greimel in Tokyo, Matt Moore in Frankfurt, Viorel Urma in New York and Alan Clendenning in Sao Paulo contributed to this report.


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; Government
KEYWORDS: economies; economists; slows; world
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1 posted on 12/15/2006 12:29:55 PM PST by NormsRevenge
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Consumer inflation flat in November
http://news.yahoo.com/s/ap/20061215/ap_on_bi_go_ec_fi/economy
AP
WASHINGTON - Inflation stayed docile for a third straight month in November, helped by falling energy prices and lower costs for everything from new cars and airline tickets to food and clothing.


2 posted on 12/15/2006 12:31:10 PM PST by NormsRevenge (Semper Fi ...... Merry Something PC.)
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To: NormsRevenge

Dollar gains as US economic indicators show strength
AFP - Thu Dec 14, 5:14 PM ET
http://news.yahoo.com/s/afp/20061214/bs_afp/forexus
NEW YORK (AFP) - The dollar extended its rebound as market concerns about a faltering US economy appeared to ease in the wake of the latest data.


3 posted on 12/15/2006 12:31:53 PM PST by NormsRevenge (Semper Fi ...... Merry Something PC.)
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To: NormsRevenge

Big business sees steady growth
Reuters - Thu Dec 14, 3:23 PM ET
http://news.yahoo.com/s/nm/20061214/bs_nm/usa_economy_chamber_dc
WASHINGTON (Reuters) - U.S. economic growth will remain steady in the next year as inflation moderates, the U.S. Chamber of Commerce forecast on Thursday, brushing aside concerns that the downturn in housing could spark a full-blown recession.


4 posted on 12/15/2006 12:32:33 PM PST by NormsRevenge (Semper Fi ...... Merry Something PC.)
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To: NormsRevenge

I'm not too sure about OECD economist. They are Keynesians and borderline Maltusians.


5 posted on 12/15/2006 12:32:54 PM PST by Kurt_D
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To: NormsRevenge

They using the same economists that screwed up every monthly and quarterly prediction for the entire Bush presidency? If I hear "Higher than economists expected" one more time.....


6 posted on 12/15/2006 12:33:42 PM PST by ElectricStrawberry (27th Infantry Regiment...cut in half during the Clinton years....Nec Aspera Terrent!!!)
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To: NormsRevenge

the above are a few links to stories that also ran the last 24 hours on the wires.


7 posted on 12/15/2006 12:33:52 PM PST by NormsRevenge (Semper Fi ...... Merry Something PC.)
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To: NormsRevenge

Economists predict monkeys will fly out of my butt.


8 posted on 12/15/2006 12:34:11 PM PST by dfwgator
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To: NormsRevenge

Good luck on that front.


9 posted on 12/15/2006 12:38:16 PM PST by conservativecorner
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To: dfwgator

I got a spam email this morning about that stock!


10 posted on 12/15/2006 12:41:59 PM PST by Redcloak (Speak softly and wear a loud shirt.)
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To: NormsRevenge

seems like only yesterday the experts were saying Japan was overtaking us and provided the model for economic growth.


11 posted on 12/15/2006 12:42:20 PM PST by the Real fifi
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To: NormsRevenge

Hey we've been carrying the water for everyone else in the world for the last four years, let them do it for a while.


12 posted on 12/15/2006 12:42:55 PM PST by NeoCaveman (Where is my Reagan, Don't say it's John McCain. Where have all the conservatives gone? - P.Shanklin)
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To: the Real fifi
seems like only yesterday the experts were saying Japan was overtaking us and provided the model for economic growth.

Ahh, the 1980's. Good times.

13 posted on 12/15/2006 12:45:05 PM PST by NeoCaveman (Where is my Reagan, Don't say it's John McCain. Where have all the conservatives gone? - P.Shanklin)
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To: NormsRevenge

Yawn. The leftists have been predicting that the US economy will crater -- and in fact in the 2006 election managed to convince many voters that it had, despite clear factual evidence to the contrary -- since GW was elected...


14 posted on 12/15/2006 12:45:08 PM PST by piytar
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To: dfwgator

"Economists predict monkeys will fly out of my butt."

Ever considered going to the proctologist?


15 posted on 12/15/2006 12:53:43 PM PST by Kurt_D
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To: NeoCaveman
And today ( Friday) the English newspapers are saying that the EU is consuming euros, 600 billion a year in administrative cost, now I wounder how much that leaves for the kids to play with?
16 posted on 12/15/2006 1:02:05 PM PST by jerryem
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To: NormsRevenge

I've been invested 30% international equities for a while now, and will continue to do so for the foreseeable future.

For those with bonds in their portfolio, you may want to allocate a little to a foreign bond fund, what with the weakness of the dollar lately.

For good diversification, you've just gotta have some international exposure.


17 posted on 12/15/2006 1:02:55 PM PST by Choose Ye This Day (Despair is not a strategy.)
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To: ElectricStrawberry
"normal"

You've noticed that too. Also the "surprising growth" meme is enough to make me want to throw a brick through my tv. Why are they always surprised at growth? Why aren't they ever surprised when jobs do not grow as much as predicted? Do they think we're living Mali or some other economic pest hole?

18 posted on 12/15/2006 1:21:48 PM PST by driftless2
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To: Choose Ye This Day

I had some of mine in a European stock fund (VEURX) and it has made about 32% YTD. Outstanding, but I worry that won't last.


19 posted on 12/15/2006 1:30:23 PM PST by Sender ("Always tell the truth; then you don't have to remember anything." -Mark Twain)
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To: driftless2
EXACTLY!! I also wonder when they're gonna hype the record-high DOW like they did when it hit 11,000 when their savior was in the big seat.

11,000 was a huge mark.....but 12,000 is nothing to talk about? 12416.76 and just a blurb...that's it?

Their agenda can't be any more transparent.

20 posted on 12/15/2006 1:40:58 PM PST by ElectricStrawberry (27th Infantry Regiment...cut in half during the Clinton years....Nec Aspera Terrent!!!)
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