Asia-Pacific economies maintained growth in the third quarter, albeit at slower rates than the second quarter. The region is bracing for more volatility ahead due to the intensified global financial headwinds.
US economic growth looks to be stronger heading into 2012, as some of the early-year headwinds – including high commodity prices and automotive supply chain disruptions – have dissipated. However, weak job and income growth, ongoing household deleveraging, and the tight fiscal posture of many state and local governments will likely keep the growth rate subpar through 2012.
Strong capital inflows in the first half forced policy makers in Latin America to navigate a path between rising prices and appreciating currencies.
However, investors are viewing the region with more caution in the wake of global market volatility, which has led to the depreciation of local currencies.
The near-term outlook for European economic growth has deteriorated as governments struggle to reassure markets that they have a credible and long-term solution to the sovereign debt crisis.
Asian economies generally grew at a strong pace in the first half of 2011, although momentum moderated in the second quarter and external financial headwinds could pose some risk to the region going forward.