U.S. Is Exception To Strong Global Growth

China continues its white-hot pace while Eurozone grows faster than expected, but U.S. is still being held back by housing slowdown.

ARLINGTON, Va. – The peak phase of strong global expansion should continue longer than most forecasts expected, according to a quarterly report by the Manufacturers Alliance/MAPI.
Economist Cliff Waldman said signs of moderation in Chinese growth have reversed; Eurozone countries, like Germany, are growing at a faster-than-expected pace; Japanese consumer spending saw some momentum; emerging Asian nations are recovering from a slowdown in investment; and Indian manufacturing growth has been over 11 percent for three consecutive quarters.
The NAFTA region is the exception, with much of its weakness stemming from the United States.
The U.S. economy has been improving, but the housing slump remains a concern. Until the residential investment downturn runs its course,” Waldman noted. “short-term forecasts of U.S. economic growth will have larger than usual margins of error.”
The annual growth of total U.S. goods and services exports is expected to slip from 8.9 percent in 2006 to 6.4 percent in 2007, due to slower industrialized country growth this year.
Total U.S. export growth is expected to increase to 9.4 percent in 2008.
Growth in non-U.S. industrialized countries is expected to be 2.2 percent in the first three quarters of 2007, then increase to 2.4 percent during the fourth quarter 2007 and first quarter 2008.
It should rise to 2.6 percent during the second quarter and 3 percent for the second half of 2008.
Growth in developing countries will moderate from 5.2 percent in the second quarter of 2007 to 5 percent in the second half. It will slow to 4.8 percent in the first half of 2008 before rebounding to 5.1 percent in the second half.
In the currency market, the dollar is expected to decline by 15 percent against the currencies of industrialized trading partners in the second quarter of 2007. It is expected to drop 5 percent in the second half of 2007 and 3 percent in the first quarter of 2008.
For the remainder of 2008, the dollar is forecast to remain flat in the second quarter, then appreciate by 3 and 4 percent, respectively in the third and fourth quarters.
Against developing countries, the dollar is expected to see a decline of 5 percent in the second quarter 2007 and 3 percent in the third and fourth quarters. For 2008, it is forecast to depreciate by 6 percent in the first half before becoming flat for the second half.
“The gap between global strength and U.S. weakness will allow for enough dollar depreciation to keep U.S. export demand moderately strong,” Waldman said.
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