The global economy is likely to remain subdued for the next four years leading to persistent unemployment, economists warn today.
Growth will fall by a third this year, while oil and commodity prices will be at about the same level in 2015 as they are now, according to the independent forecaster, the Centre for Economics and Business Research.
It bleakly predicts that growth will fall from 4.2 per cent to 3 per cent this year, significantly less than the economists' previous prediction in May that it would be 3.5 per cent. Growth will then be sluggish over the next four years, staying at between 3 and 3.6 per cent until 2015, making them the weakest years for world economic growth since 2003, apart from the crisis years of 2008 and 2009.
What growth there is will probably be seen in emerging economies, the CEBR warns. Although growth is forecast to slow in China and India next year, to 7.4 per cent and 7.6 per cent, respectively, they are still predicted to grow much faster than the eurozone or the US. The CEBR thinks both will grow at a rate of below 2 per cent until 2014, with the eurozone forecast to grow below 2 per cent for the entire period.
The CEBR chief executive Douglas McWilliams, who co-wrote the report, said: "The sluggish growth we forecast is likely to mean persistent high unemployment in the developed economies."
However, there may be some consolation for hard-pressed British families, said Mr McWilliams. "The silver lining to this cloud is that the prices of oil and other commodities are likely to be relatively weak for the next five years, putting less downward pressure on living standards than in the past two years."Reuse content