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Munich Re: Euro Crisis Putting Brakes on Global Economy in 2012

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Posted on 19 Jan 2012

Munich Re’s economic experts anticipate a downturn in the economy during 2012.

According to Munich Re, developments in Europe will be a significant obstacle for global growth. A further escalation of the euro crisis would place an additional burden on the economy. In conjunction with the continuing high level of risk aversion in the capital markets, this could lead to a severe recession that would also have global consequences.

Another risk is the high level of uncertainty surrounding US fiscal policy.

China's risks are in its high real estate prices and the potential increase in loan default rates, combined with the resulting danger of a sharp decline in growth.

An ongoing risk for growth and inflation is the potential for commodity price shocks caused, for example, by political developments. Nevertheless, there is light at the end of the tunnel: if in the course of the euro crisis politicians succeed in quickly restoring confidence in the capital markets, the economy could produce positive surprises in 2012.


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