Global economy to grow at 3.0-3.4 pc in 2011: Japan

TOKYO: The global economy will grow in the 3.0 to 3.4 per cent range in real terms next year, remaining on a gradual recovery track although there are some risks of a downturn, according to a Japanese government forecast.

For the US economy, the office of the Cabinet Office predicts that the pace of its recovery will be more gradual than was seen in previous recovery phases due to weakened domestic demand caused by sustained high unemployment.

The report projects the world's largest economy to grow at 2.0-2.4 per cent in 2011, while forecasting that the unemployment rate in the US at around 9 per cent in the same year and at around 8 per cent the following year.

It also warns of the risk of deflation in the US economy, Kyodo news agency reported.

In Europe, the office noted the potential negative impact on the economy of austerity measures implemented by governments in the region, projecting a roughly 1.5 per cent growth for next year.

The report says the Asian economy will maintain higher growth than the US or European economy, but that the Chinese and South Korean economies will expand more slowly than this year.

The report adds that in some of the countries in the region, the risk of an asset-inflated bubble is increasing as capital inflows have caused a rapid rise in asset prices.