Export Finance and Insurance Corporation’s Chief Economist Roger Donnelly predicts strong global growth to continue this financial year – provided the euro crisis doesn’t escalate.
Donnelly explains that while risks related to sovereign debt, competitive currency market manipulation, protectionism and failure to achieve international policy coordination could mount in 2011, they won’t necessarily prevent vigorous global growth.
This is because emerging market economies are now a bigger share of the world economy and are growing quickly, which should offset much of the weakness in advanced economies.
In his view, the biggest risk to the global recovery is an escalation of the euro area debt crisis, which has the potential to cause a renewed global credit crunch.
Although the risks of sovereign debt default within the euro area and of the exit of one or more countries from the currency union have risen, these events are unlikely to materialise in 2011.
The continued rise of emerging markets led by China and India will show no sign of moderating, and the leading emerging market economies will continue to buoy global growth, Donnelly says.
Export Finance and Insurance Corporation
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