CONFIDENCE in developed economies has fallen over the past months driven mainly by the continuous crisis in the Eurozone and renewed fears about its future, according to an economic review for the month ending September 2012 released by the Reserve Bank of Fiji.
While the International Monetary Fund's (IMF) 2012 growth projection for the world economy still stands at 3.5 per cent, the report said latest data point to a slowdown in advanced economies in the third quarter of this year.
"The latest plans by the European Central bank to purchase sovereign bonds via its outright monetary transactions program brought some semblance of stability to international financial markets and boosted confidence," the review said.
"Recently, there have been indications that Spain may require a full bailout, leading to a re-emergence of uncertainty over growth prospects and escalation of downside risks over the region.
"The US economy continues to experience a moderate slowdown with its Gross Domestic Product growing at a tepid annualised rate of 1.7 per cent in the June quarter — a slowdown from the 2 per cent expansion in the previous quarter. "The economic slowdown in China led to a reduction in demand for Australia's mineral exports and contributed to the deceleration in growth of our largest trading partner from 1.7 per cent in the March quarter to 0.6 per cent in the June quarter."
Meanwhile, the report said the waning of stimulus spending on reconstruction in New Zealand and Japan has left both economies experiencing a weaker domestic activity and declining global demand for their exports.
The global outlook, the report noted, has become more subdued compared to previous months with risks tilted largely to the downside.