National  Institute of Economic and Social Research announced  its quarterly review  to explain prospects  for the  world and the UK economy at the organisation’s regular press  conference  yesterday in Westminster. The Institute also declared medium terms prospects for the Public Finances.

The press conference was delayed for one week due to  late statistics received from ONS , said  senior research fellow Dr Ray Barrel who chaired and  presented  third  part of the event.

Simon Kirby ,researcher,(from right to left),Dawn Holland ,senior researcher , Dr Ray Barrell ,senior researcher at NIESR's press conference in Westminster yesterday.

Dawn Holland , senior researcher fellow of the Institute, who used NIGEM model in her research,   explained  prospects for the world economy. Holland’s findings show that the world economy expanded by 1.2 per cent in first quarter of the year and it will annualise at the rate of 4.8 per cent and it will drop to 4.4 per cent in 2011.Global recovery will  continue to be led by Asian countries like China, India, Taiwan, Korea, Japan and Hong Kong  while USA ,Canada and Brazil see moderate growth .Europe will  still revive its economy with external demand .

The world trade will increase by 14.2 per cent in 2010 and 8.8 per cent in 2011 according to Holland’s research. NIESR estimates that interest rates to remain low over the next year and will increase in 2011 in most countries. The annual inflation in OECD  as a whole forecast will average 1.8 per cent in 2010.

While  Euro Area will be expanding by 1.3 per cent this year and 1.8 per cent in 2011 ,Greece’s debt stock will decrease by 15 per cent  of GDP .If  spreads  returned to January 2010 level  Greece’s  GDP will improve 0.9 per cent next year.

China will drive the global recovery with 11.6 per cent growth this year and will continue next year by 8.3 per cent expansion. Japan will follow as a second leading country  growing by 3.3 per cent this year and 1.1 per cent  next year further explained Holland.

Simon Kirby ,NIESR’s  research fellow, revealed his recent research on prospects for the UK economy at the conference. According to  Kirby’s research  GDP in the UK will grow by 1.3 percent in 2010 and 1.7 in 2011.It will continue to increase in 2012 by 2.2 per cent. Inflation  will be above the target  until 2012 due to increased VAT. In 2012 inflation rate will be below the target which is 1.4 per cent per annum. The coalition government’s consolidation programme will increase public sector net barrowing sharply from 10.9 per cent of GDP  in 2009-2010 to 2.8 per cent of GDP in 2015-16.

Kirby’s  research also shows that “Emergency Budget” will reduce  the economic growth rate by 0.4 per cent in 2011.

In the third section of the conference ,senior researcher Dr Ray Barrell talked about  his research on medium term prospects for the public finances which suggests consumption plans .Barrell’s  research also explains the positive impact of later retirement  on the UK economy.

Holland, Kirby and Barrell answered the questions of the participants at the end of the conference.

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