DNB Markets has released Economic Outlook 2/2014. The report contains our analyses of and forecasts for economic growth and inflation, foreign exchange, interest rates and commodities.
The moderate global upturn continues. Global growth came to about 3 per cent last year, and is set to be about the same this year. This is ½ percentage point weaker than we predicted in January, mostly due to disappointingly low growth in the major industrialised countries. The main reasons for this are a cold winter in the USA, a VAT hike in Japan, heightened uncertainty and the failure of an increase in investments in the Eurozone to materialise.
Fundamental factors– like lower debt, financially stronger banks, low interest rates and higher earnings – point to a continuation of the upturn, and we predict 3½ per cent growth in the world economy next year and a scant 2 per cent in the industrialised countries. Both of these figures are marginally lower than we projected in January.
The conflict between Russia and Ukraine has emerged as a new and potentially major risk factor. On the other hand, our fears of a hard landing in China have waned. Both growth and interest-rate projections vary. While conditions point to a rate hike in the USA and UK early next year, Sweden and Norway will hold off till 2016, and the key policy rate in the Eurozone is unlikely to be raised before 2018.
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