Posted on Monday 9 September 2013 by Ulster Business
In its latest global report The Big Picture, Danske Bank says the euro area recession has ended and forecasts global growth of 2.9 per cent in 2013 and 3.9 per cent in 2014. After two and a half years of very subdued growth in the Western world, a gradual recovery in developed economies is now emerging and is expected to gather pace in 2014 and 2015.
Danske Bank Chief Economist Angela McGowan said: "When it comes to the global economy developed economies are seeing a good recovery. The US is performing really well and the euro area has largely managed to put the debt crisis behind it and slowly move out of recession. The risk to global growth has now shifted from the Euro area to emerging market turmoil. Although emerging markets are currently lagging, they are expected to benefit from rising exports to the developed world and recover in 2014."
The biggest change to Danske Bank's global forecast is a revision of their Euro area outlook. After six quarters of contraction the recession in the Euro area has finally ended and the economy grew by 0.3% in Quarter 2.
Ms McGowan said: "Uncertainty has been reduced considerably after the ECB tamed the euro crisis with the famous 'whatever it takes' comment. As confidence rises for households and the corporate sector, money is likely to be spent and invested, therefore pushing up economic growth. Fiscal policy tightening in the US and Europe is at its peak this year and the effects will start to ease in coming quarters creating room for economies to grow faster. Low inflation will also support growth as the cost of living is only rising very slowly and leaves scope for central banks to keep interest rates extremely low for a very long time."
There report also said the developed market recovery will soon give support to Emerging Economies. It notes that the Chinese economy appears to be stabilising but will remain subdued. Overall growth in China is forecast at 7.4 per cent this year and 7.7 per cent next year.