Global recovery is set to bypass Europe in 2012

GROWTH prospects for 2011 have been slashed, but Lloyds Bank Corporate Markets is forecasting a rebound into 2012 in its latest quarterly bulletin.

Global GDP will have increased by 3.8 per cent in 2011, the bank’s quarterly report predicts, down from earlier forecasts of 4.1 per cent.

The G10 countries lead the slowdown, revised from 1.9 per cent to 1.4 per cent. US expectations fell fastest, from 2.2 to 1.7 per cent.

Next year, the global economy should bounce back slightly, with forecast growth of 4.1 per cent.

China will continue to perform solidly, growing at above eight per cent, the study said, whilst Brazilian growth will expand from 3.9 per cent in 2011 to 4.3 per cent in 2012.

The Eurozone, however, risks recession as policymakers fail to find “swift solutions to contain market stress and restore confidence, or else the risk of a recession grows rapidly.”

Germany is the only major economy with a positive outlook.

Citi’s latest reports are downbeat on the UK’s outlook, too.

“Our forecast implies the UK economy will even underperform the 1930s recession/recovery cycle,” said analyst Michael Saunders, who expects total QE purchases to reach £500bn.