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Global economy in 2013: Uncertainty weighing on growth –

Emerging economies are growing faster, but challenges remain. In China, the new leadership is expected to focus on avoiding the middle income trap which will mean sacrificing faster for more sustainable growth. Reforms to open up the Indian economy to foreign direct investment have met with stiff resistance and the high inflation rate persists. Signs of reform in Russia are tepid and the government budget remains highly reliant on the price of oil and gas. Brazil has barely grown over the past 24 months, although interest and unemployment rates have dropped to record lows. The new administration in Mexico has targeted higher growth and greater security. Maritime disputes are threatening to upset relations in Southeast Asia, whilst the legacy of the Arab Spring is still reverberating across the Middle East and North Africa.

The eurozone sovereign debt crisis is perhaps the key challenge, and not just for business leaders in Europe. Growth rates in and around Europe look set to disappoint over the next 12 months. Having contracted by 0.4% in 2012, the eurozone is expected to expand by just 0.2% in 2013. Despite being outside of the single currency, the United Kingdom is expected to post growth of just 1.1% in 2013, following a forecast contraction of 0.4% in 2012. The emerging economies of central and eastern Europe are expected to grow faster in 2013 (2.6%) but their rates of expansion remain depressed by a slowdown in foreign direct investment (FDI) inflows.

Added by View user profileD C on March 7, 2013