2012 Global Economy Preview

U.S. Economy

The development of economic data in the U.S. shows that the recovery process can continue, amid the global economic downturn affecting the debt crisis in Europe. The combination of strengthening in the labor market, increased consumer optimism and expansion in the manufacturing sector of U.S. economic growth.

Manufacturing PMI Index by Dec-11 are at level 53.9, the highest level for 5 months.
The unemployment rate per Dec-11 at 8.5%, lower than the per-Nov-11 of 8.7%.
Consumer confidence index per-Nov-11 at the level of 64.5, the highest since last 7 months. Improved consumer confidence is expected to encourage domestic spending, and stimulate the economy as a whole.
Development of a fairly positive data is at least can be a positive catalyst for the movement of global financial markets, amid the uncertainty of the completion of the debt crisis the European region.
There are several factors that could threaten the recovery process in the U.S., among others, fiscal deadlock in the U.S. Congress on the fiscal deficit-cutting plan, further weakening the housing sector, as well as the debt crisis of Europe is increasingly protracted.

China’s economy

Manufacturing and service sectors showed repair, back in the phase of expansion after a contraction the previous month. Implementation of policies that could stimulate the economy became the focus of policy makers in China, as an effort to protect the economy weakened further. In terms of monetary policy, reduction in reserve requirement ratios and interest rates further, the PBOC is expected to be the policy response in 2012.

Manufacturing PMI Index by Dec-11 at the level of 50.3, higher than the previous month at level 49. Service sector PMI index rose significantly to a level of 56, from 49.7 the previous level.
Annual inflation per-Nov-11 at 4.2%, lower than the previous month of 5.5%.
The weakening of export demand from overseas and the implementation of a series of policies to withstand the risk of bubble in the domestic housing sector, have an impact on China’s economic slowdown.
Inflationary pressure eased allowing the Central Bank of China (PBOC) shifting the focus of monetary policy, the tight money policy into a pro-growth policies.
It is beginning to look to the revelation of Statutory Reserves by 50 bps, to 21% for large-scale commercial banks and 17.5% for small and medium-scale banks. This decrease is the first time since the last three years, after inflationary pressures eased.

Europe Economy

European debt crisis is still going to create volatility in global financial markets in 2012, as leader of the region’s failure to find a concrete solution to the crisis. Policy of fiscal tightening, tightening credit and declining consumer confidence and business burdening economic growth prospects. In 2012, the European economic area is projected to experience a recession with growth of -0.5% yoy.

The debt crisis in the European region of protracted worsening impact on investor confidence, which is reflected by rising bond yields in the countries of this region. This resulted in increased borrowing costs for both the state and banks.
This condition created a liquidity problem in the European banking system. The banks need liquidity support to meet the funding needs and execute banking activities.
The European Central Bank (ECB) to increase its role in efforts to increase liquidity through the purchase of bonds and lending. ECB lending to European banks, with a total value of € 489 billion over 3 years.
3Q11 real GDP grew 1.4% yoy, lower than the previous quarter by 1.7%. Industrial production index grew 1.3% on Oct-11, lower than the previous month by 2.2%. The unemployment rate rose to 10.3%, the highest level since the European region stands. Manufacturing PMI Index is based on surveys by Markit Dec-11 are at level 46.9.

Taken from Jakarta Stock Exchange Review