Global Economic Slowdown Coming, Says Deloitte

By Michael Foster, Big4.com Blogger

The eurocrisis is threatening to cause even greater damage than most economists expect, and structural problems in the United States economy threaten a recovery that hopeful analysts have been predicting throughout 2012.

These are some of the pessimistic conclusions in Deloitte’s most recent Global Economic Outlook, released for Q3 2012. Subtitled “The Summer Lull”, the report concluded that structural problems and a global slowdown point to a reversal of growth in several areas.

In addition to worries in the U.S. and Europe, the report also pointed to China’s struggle with a slowing demand for manufactured goods. “The Chinese government is trying to strike a balance between the economic slowdown and its banks’ troubled balance sheets,” the report said. “Authorities are following a narrow path designed to minimize the downturn while avoiding a deeper financial crisis,” the authors of the report added, pointing to concerns that provincial debt in China is becoming unsustainable.

Across the channel from Europe, the United Kingdom will continue to struggle as its biggest trading partners both on the continent and across the pond tighten their belts. However, domestic policy is also keeping the country from growing, the report warned. “Given the headwinds coming from Europe and the continuing fiscal discipline of the British government, it is unlikely that things will improve much in the near term despite a more aggressive monetary policy,” the writers commented.

The BRIC powerhouses that were looked at with envy from the developed world just two short years ago are looking less impressive, according to the report, pointing to economic slowdowns in Brazil, Russia, and india.

The full report is available from Deloitte.