Expect slow growth in high income countries and slow growth in developing countries.
Key risks include:
- Quantitative easing: The massive surge of capital outflows to emerging and other developing economies is having a major impact. Corporations with sound credit ratings, attracted by the low borrowing costs, have taken on more debt, thus increasing their exposure to foreign exchange. As a result, their vulnerability to future interest rate changes in the developed world and the overall exchange rate volatility will increase.
- Commodity prices:
- Industrial commodity prices are easing due to new supply, however;
- Rising global food demand will push up prices 10 to 40 per cent over the coming decade.
- Growth in food production has slowed over the past decade even as rising incomes in developing countries boosted consumption
- Higher prices will have their biggest impact in developing countries.
- Higher interest rates are a cause for concern for developing countries.
- Downgraded prospect for growth in Europe.