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One of the UK’s leading think-tanks warned today of a concurrent slowdown in every major economic region, expecting world growth to remain sluggish at 3.3% this year and 3.7% next year. In Europe the picture is a mixed one with Germany likely to see above trend growth and Southern Europe unable to escape a deep recession.
The National Institute of Economic and Social Research (NIESR) cautioned today that economic tensions will increase, given the rising unemployment rate seen particularly in many countries across Europe.
It warned that emerging markets such as China and India will no longer be able to sustain world demand and is expecting joblessness to rise although inflation will remain “moderate.”
“Europe is the epicentre of the debt crisis. Policymakers have a stark choice between forging ever stronger economic and political integration within the Euro Area, or accepting that at least one country leaves [the Eurozone].” But the think-tank forecasts that the European and Monetary Union (EMU) will remain “intact” due to “political commitment.”
The research body expects GDP in the euro area to contract by -0.4% in 2012 and improve to 0.5% in 2013.