Regional Specialists Review April 2011
Overview: It's remarkable that a rolling series of revolutions across the Middle East and North Africa, a Japanese natural disaster and associated nuclear concerns, and European sovereign default (or "restructuring") risk have appeared to dent financial markets only fleetingly. On the other hand, commodity prices have been quite elevated for some time. This has already led to higher rates of inflation in many economies, and is now appearing in the developed world.
Global growth remains robust, with a greater contribution from emerging (e.g., Brazil) and commodity (e.g., Australia) economies. However, as monetary authorities tighten policy, and national treasuries pull back on spending, many expect the global economic pace to moderate. The developed world continues to recover from the excesses of the last decade, but growth remains positive, if subdued. Inflation is the key risk "du jour" and is likely to remain in the headlines for many months to come.