Global Themes Update: Expect Polarised Economic Growth In 2014
While there is little doubt that the world economy will pick up steam in 2014, the distribution of growth will look quite unbalanced. Similar to our argument that international capital flows will differentiate between strong and weak economies rather than the naively-defined developed market (DM) versus emerging markets (EMs) grouping, we believe that economic activity within the DMs and EMs will be fairly polarised.
More specifically, we expect continued robust economic growth in the US, with the UK economy going from a standing start in early 2013 to a sprinting pace in 2014 (although we continue to warn that the foundations of this growth are weak). However, the eurozone will remain the weak link in DM growth, even with renewed efforts by the European Central Bank to ease monetary policy.
Meanwhile, in emerging markets, we see the strongest growth prospects in Asia (though we are still relatively bearish compared with consensus) and Africa, while sticking with a more subdued outlook for Latin America and Central and Eastern Europe as a result of the global commodity correction and eurozone malaise, respectively.
Our full overview of global economic growth dynamics is available to subscribers at Business Monitor Online.