Global growth will average at around 3-3.5 per cent per year during the period 2015-20, compared with 4.2 per cent during the pre-credit crisis eight year period between 2000 and 2007, according to Capital Economics.
Capital Economics economist Andrew Kenningham says: “Even when the dust finally settles from the global financial crisis, we doubt that the world will return to the high growth rates achieved before 2008.
“Slower expansion of the labour force, the lingering effects of the crisis itself and the problems in the euro-zone will hold back recovery in advanced economies.”
He says: “We expect growth to be lower than it was before the crisis in each of the four largest emerging economies, with a much steeper downturn in China and Russia than in Brazil or India.”
“The break-up of the eurozone may prove to be the best solution to the current financial and economic crisis.”
Kenningham says a slowdown in China could help bring down commodity prices and reduce the risk of a future “hard landing”, he also expects to see a sharp slow-down in growth in the eurozone and Japan.
He adds: “Average growth is likely to be lower during the years up to 2020, there may be some big positives which will support growth towards the end of the period. The first is the break-up of the eurozone, which may prove to be the best solution to the current financial and economic crisis.
“Secondly, we anticipate gradual progress towards rebalancing the global economy as a result of stronger household consumption in China.
“And the third positive is the possibility of much lower energy prices, which would boost growth in the advanced economies and reduce the surpluses of oil exporters.”