By: Dr. Mike Campbell

Today is practically the last working day of 2011 for most people as they prepare for end of year festivities. It seems an appropriate point for some nations to evaluate economic projections and revise performance.

The world’s third largest economy is still struggling to recover from the earthquake and tsunami which devastated parts of Japan in March. The government has just announced that it has trimmed its projections fro growth in 2012 to 2.2% from an earlier predicted band of 2.7 to 2.9%. The reassessment was caused because of the negative effects of the Euro sovereign debt crisis and the high Yen. These factors were blamed for a 4.5% slump in exports seen in November.

The USA has adjusted its evaluation of Q3 growth downwards from an initial reading of 2.5% to 2% and this has been further revised downwards to 1.8%. The reason given is that domestic expenditure was weaker than had been first estimated – domestic demand accounts for almost 70% of US economic output.

Republicans have relented and agreed to extend a tax break due to expire with the year. The tax break will save the average American about $1000 a year. The move is seen as a climb-down by the Republicans, but 2012 is an election year, of course.

In the UK, Q3 data was revised upwards from a modest 0.5% to an equally modest 0.6%, but at least it was a step in the right direction. As an indication of how weak things are (and the same picture is widely applicable outside the UK), the recovery has been underway for 9 quarters and the UK economy has regained just over half of the output that was lost during the five quarters of the recession.