Weak, but strengthening growth in high-income countries
GDP in high-income countries is projected to rise 1.4 percent in 2012. As with developing countries, weak carryover will mask an expected gradual strengthening of quarterly growth in most countries in the annual numbers. In high-income Europe, 2nd and 3rd quarter growth is projected to be negative due to increased precautionary saving in the face of turmoil. Combined with weak carry over, this will result in an annual GDP decline of 0.3 percent. Annual growth in high income countries is projected to pick up to 0.7 and 1.4 percent in 2013 and 2014, partly reflecting a return of carryover to more normal levels. While headwinds are projected to ease, they will remain and continue to prevent the kind of robust growth that would see output gaps close more quickly.
Annual growth in the United States is projected to accelerate from 1.7 percent in 2011 to 2.1 percent in 2012, but quarterly growth is expected to display a somewhat different pattern. Already, quarterly GDP growth has slowed from 3 percent in the fourth quarter of 2011 to 1.9 percent in the first quarter — reflecting in part a tightening of fiscal policy. Going forward, quarterly growth in the U.S. is expected to remain relatively modest as continued fiscal consolidation cuts into government spending, which will only be partially offset by strengthening private sector demand and improving net exports. GDP growth is expected to strengthen only modestly to 2.4 and 2.8 percent in 2013 and 2014 respectively.
After the profound negative impact that the earthquake and tsunami (and the disruptions emanating from the Thai floods) had on the Japanese economy, growth is forecast to rebound to 1.5 percent over 2013-14, boosted in part by continued reconstruction-related fiscal spending.