2011 Annual Report - OTCIQ.com

Macroeconomic Environment
In 2011, the global economy did not continue its strong recovery
from the prior year. According to the OECD, global gross
domestic product (“GDP”) grew at a rate of 3.8 percent in real
terms in 2011, down from 5 percent in 2010. This lower growth
rate, however, roughly matches the average growth rate for the
years 1999 to 2008. Following a recession year (2009) and a
boom year (2010), global trade expanded at a rate of 6.7 percent,
which also marks a return to its long-term average.
The OECD attributes the global economy’s weak growth in 2011
to anti-inflationary (and thus growth-dampening) policies,
lower import demand in emerging countries, and a decline in
confidence in OECD countries. Positive trends in the OECD
zone largely fizzled during the course of the year. Surveys
taken since the summer show that economic confidence has
declined, but not to the levels seen during the crisis of 2008.
Weak growth in the OECD zone in 2011 was propelled by private
consumption and investment activity. Growth in domestic
demand declined by nearly 50 percent compared with the
prior year, and growth in net exports, which had helped drive
economic growth in 2010, fell back to its pre-crisis level prior
to 2007.
Economic recovery in the United States slowed significantly.
Because of high unemployment and restrictive fiscal policies,
domestic demand grew at a lower rate despite robust demand
for consumption and investment goods. Growth in U.S. net
exports, which also returned to its normal rate after the boom
of 2010, was not sufficient to offset the decline in domestic
demand.
The economic performance in the euro zone was also tepid
in 2011. Private investment activity provided some impetus,
but the increase in private consumption was generally weak,
and there was no increase in public consumption due to
restrictive fiscal policies. Little growth impetus came from net
exports. Southern European countries (Greece, Italy, Portugal,
Spain) recorded the lowest growth rates. Buoyed by robust
domestic demand, Sweden’s GDP growth was among the highest
in the EU. The United Kingdom experienced lower domestic
demand despite fiscal policies designed to stimulate it. Its
economy expanded only incrementally thanks to net exports.
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Germany was one of the few countries to have a high rate of
economic growth in 2011. Fueled by net exports and, compared
with recent years, by uncommonly robust private consumption
demand, Germany’s economy continued its solid recovery
from the recession of 2009 and, almost without interruption,
its upward trend of 2010.
The BRIC countries (Brazil, Russia, India, China) continue to
offer growth potential. Higher oil prices helped stabilize
Russia’s economy, but GDP growth in China was lower due to
restrictive monetary policy.
2011 GDP Growth in Real Terms
Annual change in percent
Germany
France
Italy
Spain
Euro zone
Sweden
United
Kingdom
OECD
USA
Russian
Federation
0.7
0.7
0.9
0 1.0 2.0 3.0 4.0 5.0
Source: OECD, 2011.
1.6
1.6
1.7
1.9
3.0
4.1
4.0
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