Thursday, 1 December 2011

Graph of the week

I will be introducing a new category on the blog, inspired by the economist's daily chart, I will randomly select and/or make interesting charts and comment them briefly. If it turns out to be popular, maybe I'll turn the category into 'graph of the day'. 

The first one is taken from the Economist's daily chart:
Source: The Economist, Nov 28th 2011.

It is the OECD GDP growth forecasts for the year(s) to come. It appears that 2012 will be the year of the double-dip recession. This will be particularly emphasized in case of a euro break-up. The European countries in the figure reflect this the most. On the other hand the US economy is expected to slightly increase growth to a steady 2%, while Japan is expected to rebound from its earthquake tragedy earlier this year. The developing economies will also be affected by the european slowdown as their exports are expected to fall. 
It is worth noting that the OECD have made the predictions based on the fact that the current status quo situation persists throughout the following year. Due to the dynamics of bond market reactions and political responses I believe that the road ahead will be rough and the growth forecasts will have to be revised a couple of times. Let's all hope they will be revised upwards if/when the credible solution to the sovereign debt crisis is found. If not, we're in for a depression rather than a recession. 

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