Real gross domestic product (GDP) growth in the United States will reaccelerate, and reach 3.5–4 percent in the second half of this year, IHS Global Insight said in its April World Flash report.

While higher gasoline prices are eroding consumer confidence, an improving jobs market is supporting consumer spending. Meanwhile, businesses are spending more freely on both new technologies and new hires, the report said.

Following is the full text of the World Flash report:

The Global Recovery - A Little Less Robust Due to Multiple Headwinds

Higher oil prices, Japan’s triple disaster (earthquake, tsunami, and nuclear crisis), and fiscal austerity in key economies (now including the United States) are conspiring to erode global economic growth this year. IHS Global Insight has reduced its forecast of 2011 world real GDP growth from 3.7% to 3.5% over the past month. Since the world economy entered 2011 with strong momentum, it should be able to survive these shocks—assuming they do not get much worse. The predominant risk for many emerging markets remains overheating and further inflation of asset bubbles.

United States - Weaker GDP Growth Belies Other Strong Data

Real GDP growth in the first quarter is likely to have been less than 2%—and second-quarter growth will probably be only a little stronger. In contrast, manufacturing output is roaring along and recent business surveys are consistent with a 4% growth rate of the economy. This suggests that, after a short pause, real GDP growth will reaccelerate, reaching 3.5–4.0% in the second half of this year. While higher gasoline prices are eroding consumer confidence, an improving jobs market is supporting consumer spending. Meanwhile, businesses are spending more freely on both new technologies and new hires.

Europe - Phase Three of the Sovereign Debt Crisis

As expected, on 6 April Portugal asked the European Union for a bailout, joining the ranks of Greece and Ireland as Europe’s most politically and economically troubled countries. All three are technically insolvent and will likely suffer through a protracted period of economic contraction, stagnation, or both—an outlook that could darken further if the European Central Bank (ECB) keeps raising interest rates. While the focus has now shifted to whether Spain can avoid a similar fate, the good news is that much of Northern Europe has shrugged off the sovereign debt crisis—so far.

Japan - All Signs Point to a Sharp Contraction, Followed by a Strong Rebound

The Japanese economy will probably contract at a 5–6% annual rate in the second quarter. Assuming that the reconstruction efforts get under way over the summer, annualized growth in the second half of 2011 could average 7–8%, before gradually settling to the pre-earthquake “baseline” of 1.5–2.0%. There are two factors that make these estimates more uncertain than usual--success (or lack thereof) in containing the nuclear disaster and the extent of the power generation shortfall.

China - Little, if Any, Slowing Yet

China’s first-quarter real GDP growth was 9.7% year-on-year (y/y), compared with 9.8% in the fourth quarter of last year. Fixed-asset investment grew a sizzling 25% y/y. It is quite clear that, despite the most aggressive period of tightening in years, Chinese authorities will have to tighten even more to prevent property prices and overall inflation from getting out of control. This tightening increases the risk of a boom-bust cycle over the next two to three years.

Other Large Emerging Markets - Growth Is Slowing in Some, But Still Strong in Others

IHS Global Insight expects emerging markets' growth to slow from 7.1% last year to 6.4% this year. Countries such as Brazil, Mexico, and Turkey, where monetary policy is tight, will experience the most pronounced weakening of growth.

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