MORBID SPECULATION

The two words, morbid speculation, in this issue's title come from Mario Draghi, new head of the European Central Bank (hereafter the "ECB").  He was commenting on the future of the euro currency and the views of critics and pundits.  He acknowledged there are big problems confronting a number of European countries, as well as existential issues surrounding the whole notion of an integrated Europe and common currency.  But he resolutely rejected morbid speculation! And we agree.

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 Low For Longer, And Longer, And...

Scotia Economics expects global growth to average 3.4% in 2012, with the performance differential between the generally weaker developed economies and the generally stronger developing economies continuing.  The downward revision (0.2 percentage points) from our January 2012 forecast reflects the deepening recessions in the southern peripheral nations of the euro zone.  Advances in the faster-growing emerging nations are being constrained by both the trade shocks rippling around the world and by prior tighening moves to contain domestic inflationary pressures.  This is most notable in the Asia-Pacific region where growth forecasts for China, South Korea, and Australia have moved to a lower trajectory.  India too has downshifted out of high grear, though this largely relects past tightening moves to contain domestically generated inflationary pressures.  A more moderate pace of rebuilding in Japan has also contributed to the reduced growth momentum internationally.

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