For 2011, the Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF) assess differently the economic environment in which Merck operates. Merck orients toward the forecasts made by the OECD.
For the OECD’s 34 member countries, the OECD expects a global increase in gross domestic product (GDP) of 2.3% in 2011 and 2.8% in 2012. For the United States, the OECD expects GDP to grow by 2.2% in 2011 and by 3.1% in 2012. It forecasts the GDP of the eurozone to grow by 1.7% in 2011 and by 2.0% in 2012. For Japan, the forecasts are somewhat lower. GDP is expected to increase by 1.7% in 2011 and by 1.3% in 2012.
The OECD expects an economic recovery, albeit one which will involve risks. For the near future and for a sustainable recovery from the crisis, the OECD calls for governments to immediately concern themselves with consolidating state finances in order to achieve more stability in the financial markets. Moreover, it is essential to end the different economic stimulus programs at the right time. The OECD expects that interest rates will not return to a normal level until the first half of 2012, as it predicts weak growth in the United States and the eurozone. In addition, the OECD is encouraging a shift in economic policy away from crisis management and toward crisis prevention.
The growth prospects for emerging countries such as Brazil, China and India are significantly better. Nevertheless, there is inflationary pressure in both Brazil and China, while India has to contend with its tax deficit.
The IMF predicts global GDP to increase by 4.4% in 2011, yet warns against excessively low consumer demand. The IMF forecasts a 2.5% increase in GDP for developed countries in 2011 (including a rise of 3.0% in the United States, 2.2% in Germany and 1.6% in Japan). For emerging and developing countries, GDP is predicted to increase in 2011 by 6.5%, including a rise of 9.6% in China, 8.4% in India and 4.5% in Russia. According to IMF data, global GDP is predicted to grow by 4.5% in 2012. The United States is expected to show GDP growth of 2.7% in 2012, which is slightly lower than in 2011, Germany growth of 2.0%, which is also slightly lower, and Japan growth of 1.8%, which is slightly higher than in 2011. At 4.4% and 9.5%, respectively, GDP growth in Russia and China is expected to maintain almost exactly the same level as in 2011. According to the data available, GDP growth of 8.0% is expected for India in 2012, which would be slightly less than in 2011.
The IMF sees risks for 2011 in the high levels of national debt, the volatility of the financial markets, the financing of banks and uncompleted reforms of the financial markets, as well as the weakness of real-estate markets in some countries. These countries additionally suffer from persistently high unemployment rates owing to slow growth in industrialized countries.
We assume that uncertainties in the overall economic development of certain countries are also to be expected in the future. Consequently, our forecasts have taken these uncertainties into account.