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Global economy sees greater stability: Moody’s

London, November 12, 2013

After a sustained period of turbulence in economic and financial markets, the global economy now looks set for somewhat greater stability over the coming years, said a Moody's report.

The Moody's Investors Service said in a report, entitled ‘Global Macro Outlook 2013-15: Navigating towards calmer waters,’ reviewed key recent developments, provides an update on Moody’s baseline forecasts for 2013-15 and discusses key risks around the rating agency's forecasts.

Moody's noted that significant progress has been made to address structural imbalances since the onset of the global financial crisis, while policy makers have successfully facilitated necessary adjustments in the private sector.

Significant challenges remain with emerging economies are seeing a deterioration in the near-term growth prospects and facing longer-term concerns in light of the eventual normalisation of US monetary policy, said the report.

Moody's expects a relatively modest recovery in the G-20 advanced economies, with real GDP growth of around 1.3 per cent this year, followed by 2 per cent in 2014 and around 2¼ per cent in 2015, it said.

In the G-20 emerging economies, Moody's forecasts for growth are weaker, with an expectancy of around 5 per cent this year, followed by 5.5 per cent during the subsequent two year.
 
"While global growth is likely to remain subdued, compared with past economic recoveries, some of the biggest risks around the economic outlook now seem to have dissipated," said Colin Ellis, associate managing director.

"Recovery still cannot be taken for granted, but there are signs that a cautious optimism is starting to take hold," he said.

It said that the balance of risks to the global economy remains skewed to the downside, though the uncertainty around its central forecasts has declined in recent months.

Particular risks stem from the eventual exit from monetary stimulus measures, particularly in the US; a further flare-up of the euro area debt crisis, perhaps triggered by a lack of progress in shoring up the banking sector and implementing institutional reforms; and a shock to global asset markets or the US economy arising from continued political gridlock. - TradeArabia News Service




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