October 1, 2012
While new policy stimulus from the ECB and the Fed has underpinned risky assets in recent weeks, the US and Japan’s economies have been disappointing.
We now expect the world economy to grow by 2.9% this year and 3.2% in 2013, down almost ½ pp from our previous estimates. This is mainly due to a much slower than expected recovery in the US where uncertainty about avoiding the fiscal cliff is weighing on the economy. We now see US growth of just over 2% for 2012 and for 2013. We have cut our EMU forecast from 0.3% to 0% in 2013 (2012 -0.5%), still expecting the economy to bottom out in Q4 2012. But with a poor economic outlook and considerable political uncertainty, we see a high risk of a return of serious tensions in the coming months. Most emerging markets, particularly India, Brazil and China, are also likely to struggle because of weaker exports to developed economies.
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