FACTBOX-Major bank’s economic outlooks for 2011

The following are economic outlooks from selected major
banks for 2011. The factbox will be updated to include
additional views, when they become available.

New entries marked *

* MORGAN STANLEY — The Three Rs.

“Rebalancing: Further progress from the unbalanced
pre-crisis global economy to a more balanced one is a
pre-requisite for making this recovery sustainable over the next
several years. Encouragingly, we see external imbalances
shrinking as many surplus countries transition from export-led
to consumption-led growth and many deficit countries move in the
opposite direction.

“Reflation: During the rebalancing process, the G3 central
banks will likely keep policy very expansionary, which should
support the ongoing reflation of the global economy and
financial markets. Many emerging market central banks will
likely raise rates, but won’t be overly aggressive …

“Reconciliation: Debt-laden governments are facing the huge
challenge of reconciling conflicting claims by their bondholders
and stakeholders (citizens) on their limited resources. Which
choices governments will be making between the various options
— default, engineering strong growth, fiscal austerity,
monetisation and/or forcing lenders to fund them at low interest
rates — should be key for economic and market outcomes in 2011
and beyond. We continue to think that a spreading of the
sovereign debt crisis constitutes the main downside risk to our
otherwise constructive global outlook.”

* NOMURA – Emerging economies thrive, developed advance.

“We forecast global growth of 4.3 percent in 2011. Emerging
economies are set to keep growing strongly but risk overheating
while the developed world recovery faces … stiff headwinds.

“The (U.S.) recovery from the “Great Recession” is likely to
remain a slow and arduous climb. We forecast growth to remain
below its underlying potential for most of the coming year.

“We forecast the (euro zone) recovery to become more evenly
driven by domestic and external demand. Cross-country
divergences look set to widen further in 2011, complicating the
ECB’s (European Central Bank’s) exit path.

“Growth in (UK) net exports and investment will likely
offset the fall in public spending and the impaired growth in
private consumption. Inflation is stubbornly high but policy is
on hold for now.

“The Japanese economy has slowed sharply. However, we expect
it to avoid a full-blown recession.

“Asia’s economies are rebalancing, but unless macro policies
also rebalance, setbacks are likely. We expect (Latin America)
to begin 2011 with a surge in commodity-driven inflation. Fears
of further currency appreciation will likely result in a slow
policy response, leading to higher inflation.”

* WELLS FARGO – Sluggish developed world, strong emerging.

“We forecast that the United States, which accounts for more
than 20 percent of global GDP, will continue to grow at a
sub-trend pace — only 2.6 percent in 2011, which is
significantly below the annual average growth rate of 3.2
percent that was achieved between 1992 and 2007 …

“Some countries in the euro area, which represents roughly 20
percent of global GDP, also experienced sizeable increases in
consumer debt in the last decade.

“The ratio of household debt-to-disposable income in the
United Kingdom exceeds the comparable ratio in the U.S. and
growth in British consumer spending will likely remain
lacklustre.
“The combination of slower global growth and the recent
appreciation of the yen will cause the overall rate of Japanese
GDP growth to downshift from 3.6 percent in 2010 to roughly 1
percent next year.
“In contrast to the lackluster expansions we forecast for
most advanced economies in 2011, we project that economic growth
in the developing world, especially in non-Japan Asia and Latin
America, will remain strong. Real GDP growth in China will
likely grow in excess of 10 percent in 2010 and about 9 percent
next year. Likewise, the Indian economy should grow nearly 8
percent in 2011. The real GDP growth rate of 5 percent that we
project for Brazil in 2011 is a very solid achievement for that
economy.”

FACTBOX-Major bank’s economic outlooks for 2011