(January 5, 2012) — The global impact of the Japanese earthquake, the initial slow speed by which Chinese inflation would stop rising, the global obsession with all matters European Union, as well as the repeated inability of the European policymakers to get ahead of the curve were all underestimated in 2011, says Goldman Sachs Asset Management chairman Jim O’Neill.
Unlike last year’s bullish predictions, the chairman — credited for coining the acronym BRIC — described in a “Viewpoints” letter a slightly bleaker picture in the year ahead, predicting global GDP growth of 3.4% for 2012, slightly below economists’ expectations of 3.7% growth for this year and 4.1% for 2013.
Meanwhile, O’Neill said recession is likely in the Eurozone, predicting a 0.4% contraction for this year against a widely expected 0.4% figure for growth.
Looking back on 2011, he said:
“In some ways, I found last year to be one of the more difficult ones to analyze that I can remember facing in my rather long time in this business. As the barometer of global risk, the S&P closed at 1257.60, almost unchanged from its closing level in 2010. This is virtually unheard of, and in itself, explains partly why 2011 was so difficult to analyze.”
In terms of BRICs and growth markets, the Goldman Sachs chairman asserted that China will likely grow more slowly this decade than the last one. He continued: “What is less clear is whether the other 3 BRIC countries will grow by less, or more, than the last decade.”
Yet, even though China is likely to grow more slowly, it is far from obvious to me that this is anything to worry about, O’Neill said.