Weekly Commentary - Economy growth will strengthen further in 2014
Global growth should be stronger in 2014, under the supports by major central banks’ easy monetary policy and fiscal headwinds waning. Business surveys have clearly showed an expansion signal recent. Even though oil price is not cheap, the risk of rapidly higher prices has decreased since oil productions keep raising in U.S. Inflation pressure should stay moderate, allowing major central banks to maintain lower interest rate to support economic recovery. Those are factors to support a stronger global recovery in 2014.
In U.S., the Fed is widely expected to taper starting from January, and ‘tapering’ is likely to be more cautious. Therefore, those negative impacts will reduce. With lower interest yields and mortgage rates, housing price should improve. In addition, higher stock prices will support consumption, investment and further overall US growth.
In Eurozone, industrial production has been stronger than expected recently. In addition, there are some signs of bottoming in consumer, investment spending and labor market. With low inflation condition, ECB may resort to additional easing measures to maintain economic growth in 2014.
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