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Dear Clients,

After a tumultuous year, particularly in Europe and Japan, the global economy will continue a pattern of divergent, desynchronous development in 2012. There is no single global forecast; investors must manage a complex landscape of differential growth that varies within regions, and amongst both developed and developing economies. The economic outlook will at times be overshadowed by local political changes, both planned and unplanned, over the next twelve months.

Please find attached our 2012 annual forecast, “The New Divergence". Key conclusions to the report include:

• It is estimated that the US economy grew by 3.5-4.0% during the fourth quarter of 2010, and will grow by 2.5-3.0% during 2012
• Residential and commercial construction will provide growth momentum in the US in 2012
• US consumer spending will grow at a moderate pace, but exports and business spending on equipment will slow
• The European economy will experience a moderate recession during the next two or three quarters
• Although Chinese growth will slow in 2012, it will avoid a hard landing because of the lack of leverage and scope for monetary expansion by the PBOC
• The economies of Latin America and East Asia are vulnerable to a credit induced-slowdown in 2012 because of the regions’ dependence upon lending from European banks
• Japanese growth will slump from its recent reconstruction-led robust performance, but the economy will still grow by 2% in 2012

With best wishes for a successful New Year.

Best regards,
David Hale
Chairman

David Hale Global Economics, Inc.

847-386-6009 (tel)
847-386-6011 (fax)
davidhale@davidhaleweb.com

http://davidhaleweb.com
http://whatsnextbook.com

NEWS: Yale University Press has published “What’s Next?” Unconventional Wisdom about the World Economy, by David Hale and Lyric Hughes Hale, available now

About "What's Next?": http://whatsnextbook.com


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