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The IMF released its economic outlook for China this morning, and the big takeaway is that IMF economists have lowered their expectations for economic growth. The Chinese economy has, once again, shown its resilience in the midst of a difficult external environment, buoyed by robust corporate profitability and rising household incomes. However, net exports will prove to be a significant drag on growth in the coming two years, with the current account surplus remaining at 3–4 percent of GDP. As a result, growth is expected to fall to 81⁄4 percent this year (from 9.2 percent in 2011), gathering speed in the latter part of this year and rising to 83⁄4 percent in 2013. Here is a look at the IMF's GDP growth projections for China this year: And here is one look at the importance of exports to China's economy: While China weathered the Global Economic Recession of 2008-2009 relatively well, the big concern is that Europe's economic woes will hit China harder this time around. Read the IMF's China Economic Outlook here . (Hat tip Reuters )

Real GDP increased 2.8 percent in the fourth quarter of 2011, according to a new report from the Bureau of Economic Analysis . For the year, real GDP rose 1.7 percent. From the report: The increase in real GDP in the fourth quarter reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), exports, residential fixed investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. The acceleration in real GDP in the fourth quarter primarily reflected an upturn in private inventory investment and accelerations in PCE and in residential fixed investment that were partly offset by a deceleration in nonresidential fixed investment, a downturn in federal government spending, an acceleration in imports, and a larger decrease in state and local government spending. Here is a look at the ups and downs of real GDP over the last 4 years: Real GDP increased 3.0 percent in 2010. The BEA report lists drops in inventory investment and government spending--"the annual decline was the largest decline since 1971"--as primary reasons for the slowdown. Read the full release from the BEA here .

In his book, The Growth Map: Economic Opportunity in the BRICs and Beyond , Jim O'Neill argues that the term emerging markets no longer applies to the BRIC nations (and a few others, including Mexico and Korea). While he has long been bullish on the economies of Brazil, India, and China, O'Neil--chairman of Goldman Sachs Asset Management--has come to realize that, in many ways, these economies have earned a little more respect as strong, stable markets. He spoke recently with Charlie Rose about the strength of the BRIC economies, and how we all need to stop regarding "growth markets" as "developing." Here is an excerpt: Watch the full interview here .

Since 2008, some Latin American economies--we're looking at you, Brazil--have managed to do quite well relative to the economies in other regions. But as we see China and India losing a bit of momentum, might these Latin American nations be more vulnerable to global slowdowns? Paulo Levy of IPEA , the applied economic research institute of the Brazilian government, thinks there is a good chance that Latin American economies will have another year of strong performance. At Project Syndicate , he predicts 4% growth over the year. That's not a stunning figure, but it is likely to be well ahead of the pace elsewhere. Levy: One reason for this prediction is that abundant liquidity in international markets and continuing high demand from China and India may prevent commodity prices – especially for agricultural products – from falling as much as they did during the 2008-2009 crisis. Gains in terms of trade have been crucial for growth in Latin America, given the region’s low domestic saving rates, because they encourage investment but have relatively little negative impact on current-account balances. Strong capital inflows, especially of foreign direct investment, and terms-of-trade recovery since 2009 have made the region less vulnerable to external shocks – that is, to recurrence of the abrupt capital-flow reversal that occurred in late 2008 and early 2009. More importantly, most Latin American countries now have in place counter-cyclical measures to mitigate any negative external impact. For example, many countries that were tightening their monetary policy when the first signs of turbulence emerged have either put interest-rate hikes on hold, or, like Brazil, have already started to reduce rates. Most Latin American countries’ recent adjustments, moreover, have prevented their budget positions and current-account deficits from becoming sources of vulnerability. This appears to be the case, for example, in Peru, where sound fiscal policies have kept deficits and inflation under control. It is also true in Colombia, where strong budget revenues could allow for a temporary spending boost to counter external risks. Noteworthy exceptions are Argentina and Venezuela, where macroeconomic tensions have reduced the scope for counter-cyclical action, and Mexico, whose fate is bound by extensive trade links to that of the United States. Read Southern Resilience here .

In The Atlantic , Umair Haque , director of the Havas Media Lab , makes the case for developing a new measure of economic strength. Haque: The Bureau of Economic Analysis calls GDP "the crowning achievement of 20th century economics"--and it is not overstating the case. It single-handedly allowed America to begin optimizing its economy for a then-compelling definition of prosperity: industrial output. GDP is an income statement for an economy--to use my auto allegory, a rev counter. But a balance sheet is like a speedometer. It tells us whether our effort--our busyness--is actually getting us anywhere. Just as the crowning achievement of twentieth-century economics was constructing a national income statement, so the crowning achievement of twenty-first-century economics is likely to be conceptualizing and constructing a national balance sheet, a speedometer for the economy. While I can't build a full-blown balance sheet for you--that's a grand, generational project--we can take a brief glimpse across the different kinds of capital and try to ascertain whether their buckets are filling or emptying, whether the speedometer's needle is rising or falling. You might see social capital--the wealth of relationships--crashing. According to Ohio State University's Pamela Paxton, declines in trust among individuals of half a percent per year from 1975 to 1994. A life rich in relationships and connections seems to be a more and more elusive goal. You might notice human capital--the wealth in people--splintering. Perhaps the most essential component of human capital is education. Yet, the Brookings Institution found that, for the first time, older generations have attained more higher education than younger ones. That points to an inflection point in human capital, marking a peak in American educational attainment. Haque goes on to suggest several other potential variables, like intellectual capital and organizational capital. What else might be important to add? And what will prove to be the best means of quantifying some of these variables? Read GDP Needs Help: Let's Build a Second Measure of Economic Strength here .

We find it hard to talk about China without talking about India. Sometimes, for the sake of economic comparison, we pit the two against each other. Other times we pit the two, often along with South American kindred spirit Brazil, against the developed economies of the West. india and China seemed to zag while the rest of the world zigged during the global economic crisis, and were able to grow while the US, China, and Europe stagnated. But as 2011 ends, the two growing powerhouse economies are showing some vulnerability. At Project Syndicate , Stephen Roach warns us not to carried away by concerns that China and India will struggle in the coming year. He is a little worried about India's ability to avert crisis. As for China, Roach says not to expect a "hard landing," as China's policymakers have taken necessary action to ward off any major downfall: That is particularly evident in Chinese officials’ successful campaign against inflation. Administrative measures in the agricultural sector, aimed at alleviating supply bottlenecks for pork, cooking oil, fresh vegetables, and fertilizer, have pushed food-price inflation lower. This is the main reason why the headline consumer inflation rate receded from 6.5% in July 2011 to 4.2% in November. Meanwhile, the People’s Bank of China, which hiked benchmark one-year lending rates five times in the 12 months ending this October, to 6.5%, now has plenty of scope for monetary easing should economic conditions deteriorate. The same is true with mandatory reserves in the banking sector, where the government has already pruned 50 basis points off the record 21.5% required-reserve ratio. Relatively small fiscal deficits – only around 2% of GDP in 2010 – leave China with an added dimension of policy flexibility should circumstances dictate. India, however, "is more problematic," Roach notes: India is more problematic. As the only economy in Asia with a current-account deficit, its external funding problems can hardly be taken lightly. Like China, India’s economic-growth momentum is ebbing. But unlike China, the downshift is more pronounced – GDP growth fell through the 7% threshold in the third calendar-year quarter of 2011, and annual industrial output actually fell by 5.1% in October. But the real problem is that, in contrast to China, Indian authorities have far less policy leeway. For starters, the rupee is in near free-fall. That means that the Reserve Bank of India – which has hiked its benchmark policy rate 13 times since the start of 2010 to deal with a still-serious inflation problem – can ill afford to ease monetary policy. Moreover, an outsize consolidated government budget deficit of around 9% of GDP limits India’s fiscal-policy discretion. Read Why India is Riskier than China here .

Japan went into a recession two decades ago and has been experiencing economic stagnation ever since. With low growth in the US, there may be lessons policymakers here can take from monetary and fiscal policy moves in Japan. Barry Bosworth , senior fellow for Economic Studies at Brookings , says both Japan and the US need to embrace significant, structural changes to their economies in order to spur real growth:

At Project Syndicate , Barry Eichengreen gives his take on what is likely to happen in the global economy in the coming year. Eichengreen is neither a doomsayer nor a bright-eyed optimist, and so he may not get a lot of airtime to share his projections. Instead, he tells us to expect the EU, US, and China will all "muddle through," in 2012. While the eurozone is unlikely to collapse in 2012, there will be no definitive answer to the question of whether the euro will survive, because there will be no quantum leap in European integration. Treaty revisions take time to draft – and more time to ratify. Efforts to strengthen Europe’s fiscal rules, for example, will take the form of bilateral agreements between governments, rather than changes in the European Union’s Lisbon Treaty. It is a sad state of affairs when a recession qualifies as muddling through. But such is the European condition. Consider next the United States. While recent data suggest that the economy is doing better – all signs are that GDP will have expanded at a 3% annual rate in the fourth quarter of 2011 – it is important not get carried away. Fiscal support for the expansion will continue to be withdrawn. And, while the housing market shows some signs of stabilizing, prices will remain weighed down by the large shadow inventory of homes in foreclosure and held by banks. These considerations suggest that the acceleration of US growth that began in the third quarter of 2011 is unlikely to be sustained. At the same time, if growth slows significantly, the US Federal Reserve will undoubtedly respond with another round of quantitative easing – QE3 by another name. Thus, while growth next year is likely to fall well short of 3%, the US should be able to avoid a double-dip recession. Finally, China should grow by 7.5-8% in 2012. This is muddling through, Chinese style –considerably slower growth than the double-digit rates of the past, but not the hard landing that purveyors of doom and gloom warn is inevitable. Read Disaster Can Wait here .