Real-side activity strengthened in early 2012 but it shows signs of renewed weakness
Improved conditions in financial markets during the first four months of the year may have reflected (and have contributed) to a turnaround in the real side of the economy. Global industrial production, which had been very weak through much of the second half of 2011 (partly due to supply disruptions from the earthquake and tsunami in Japan and from extensive flooding in Thailand), started expanding once again in the first quarter of 2012—growing at a 9.4 percent annualized pace.
Table 3. Comparing regional IP growth in 2011 H2 versus Q1 (or MRV) where available
Source: World Bank
The pickup in activity was broadly based and evident in high-, middle-, and low-income countries alike (figure 6 and table 3). Even the Euro Area, which saw 6 months of declining activity in the second half of 2011, had begun to accelerate. The strengthening in industrial production data was partially reflected in first quarter GDP data for the Euro Area. Area-wide, GDP was stagnant, reflecting relatively robust growth in Germany and Greece (respectively 2 and 2.9 percent saar), and less robust growth in Belgium and France. These expansions were offset by continued contraction elsewhere, including in Italy, the Netherlands, and Spain.
Figure 6. Industrial production picked up markedly in early 2012