Economic forecasts 2010-2011

we are surely believe the world's economy is on the way to surge, not sharply but steadily. The world trade is warming and the data tells us the environment will be better for Chinese magnet companies, including HPMG. we estimate the Alnico magnet demand will be 1000t higher, Smco 100t higher as well as NdFeB 15%.

Cautiously optimistic
Inside we introduce revised 2010 global economic forecasts and initiate our
outlook for 2011. We are cautiously optimistic about the prospects for the global
economy over the next two years. Barring policy error and adverse shocks, the
world economy should post growth of 3.6% and 3.7%, respectively, in 2010 and
2011. Global industrial production is expected to expand 5.7% in 2010 and 5.2% in
2011, following a decline of -7.4% in 2009.

Policy and emerging underpinnings
Economic recovery remains underpinned by policy stimulus. We do not envisage
fiscal tightening in the major economies next year and only expect a gradual move
toward less accommodative monetary policies in mid-2010. But global growth
outcomes will be uneven. Emerging economies—led by China and India—are
expected to maintain a wide growth gap to the advanced economies.

Subdued inflation—for the most part
Growth in the advanced economies is expected to be near trend over the next two
years, a relatively poor result compared to past recoveries. The familiar
restraints—household and financial sector balance sheet repair—will remain
significant obstacles to the achievement of stronger growth. As a result, we expect
inflation pressures to remain subdued. US headline inflation, for example, should
remain below 2% through 2011. However, in many emerging economies capital
inflows, weak currencies, and rapid money growth could pose greater asset- or
goods-price inflation risk over the next two years.
 

Unresolved global imbalances
Global imbalances will remain largely unresolved. The US is expected to achieve a
degree of internal rebalancing as households maintain higher savings levels. But
large structural US budget deficits mean that US aggregate savings will remain
below desired investment, implying the continuation of still-large US structural
current account deficits. In Europe, Japan, and the emerging market complex, we
believe domestic demand and currency appreciation will be insufficient to
meaningfully adjust global external imbalances.