The global economy continued its recovery during the final quarter of 2010, supported by stronger performances in emerging economies and the significant expansion of international trade. Preliminary indications point to the global economic growth trajectory being maintained during the first months of 2011, despite a number of headwinds. These include the earthquake/tsunami in Japan and geopolitical risks in the MENA region, which are driving up oil prices. In the advanced economies, growth has been better than expected, but it remains fragile. In the major emerging economies, activity has been robust but inflationary pressures are taking center-stage and signs of overheating are beginning to emerge.
The inflation data for February in the USA confirm the recent surge in price movements and a more modest acceleration in core inflation. Higher energy and food prices are impacting the consumer price index (CPI), with the overall CPI increasing by 0.5% in February and the core CPI rising by 0.2%. In the euro area, inflationary pressures could jeopardize the sustainability of the economic recovery.
Inflation stood at 2.4% in February , which is the same level as for January. This is considerably higher than the target of the ECB, which has highlighted the risk that the surge in headline. Inflation caused by energy and food prices will become entrenched through “second round” effects on wages and other costs.
http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/1Q2011-Africa%20and%20Global%20Economic%20Trends.pdf
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