Continuing Factors Influencing Growth

As we explained in our fall 2011 economic outlook, there are three major factors influencing short-term global economic performance that businesses should be aware of when setting their plans.

First, as a legacy of the financial crisis, deleveraging in the financial, household and government sectors will constrain economic growth to below-trend levels in many advanced economies. Second, strong growth will continue in emerging market economies (EMEs), although at rates somewhat below those in recent years, particularly in China, which has become relatively more reliant on domestic demand to drive growth. Third, how economic policies adjust to growth prospects and internal imbalances will play a crucial role. In all markets, there is a heightened degree of uncertainty with respect to economic policy as governments in advanced economies deal with the political consequences of deleveraging and governments in the EMEs, particularly China, struggle with the domestic