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2014 FORECAST

Global economy to grow by 3.3pc

Manama, December 16, 2013

After wallowing in an economic 'soft patch' for the past two years, the global economy is likely to emerge in 2014 with modest growth of 3.3 per cent compared with 2.5 per cent this year, said an expert.

"The easing of the twin headwinds of private sector de-leveraging and public sector austerity will bolster the improved outlook, especially for developed economies," said Nariman Behravesh, chief economist of IHS, the global leader in information and analytics in a report in the Gulf Daily News (GDN), our sister publication.

"Many emerging economies will also likely enjoy stronger growth next year, pulled along by export-led growth to the US, Europe and China. That said, the global growth rebound is likely to be quite modest."

The global growth outlook for next year is the summary forecast in Behravesh's annual Top10 Economic Predictions, which were released yesterday.

The US economy is forecast to slowly speed up. The drag from fiscal policy will be less, allowing underlying strengths in the economy - such as housing, the ripple effects of the boom in unconventional oil and gas production, steady growth of consumer spending, and an uptick in capital spending - to become more visible, resulting in growth of 2.6 per cent next year, compared with 1.7 per cent this year.

Despite signs of weakness, the European recovery will continue, but at a very sluggish pace. Forecast growth of 0.8 per cent will be supported by very accommodative monetary policy, stabilising labour markets, less emphasis on austerity, improved spending power, better competitiveness in peripheral countries and greater confidence in euro zone politicians to manage their sovereign debt crisis.

Germany and the UK will grow faster than they did this year; Greece, Italy and Spain will struggle to attain positive growth.

IHS expects China's growth to inch up from 7.8 per cent this year to 8pc next year. The government is expected to apply additional moderate stimulus if growth dips below 7.5 per cent and stronger stimulus if it goes below 7 per cent as China looks ahead to problems of an aging population and the consequences of rapid credit growth, including a new housing bubble and rising debt levels.

For this year, IHS forecast that global growth would hold steady at 2.6 per cent and it stabilised at around 2.5 per cent.

Nine out of 10 predictions for the year were on the mark. - TradeArabia News Service




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