The Economist Intelligence Unit’s latest world economic outlook (free registration required) is largely unchanged from last month, with global GDP growth (at PPP) forecast to reach 4.3% this year.
The biggest change to our forecast, unsurprisingly, is to the forecast for disaster-ravaged Japan. We now expect Japan to grow by 1% this year, down from 1.6% before the earthquake and tsunami that struck the country on March 11th. There will be a large contraction in the second quarter of this year, although growth will bounce back in subsequent quarters as rebuilding begins. In fact, we expect growth of 1.8% in 2012, up from an expectation of 1.4% before the disaster. This will do little, however, to boost Japan’s dire public finances, with the country’s budget deficit expected to reach 7.9% of GDP this year.