Outlook for 2014 strengthens
• The US economy is working its way through a soft patch due to substantial fiscal tightening. However, at the same time the US outlook for 2014 is strengthening as fiscal tightening is proving front-loaded and should ease more than previously expected in 2014. House prices are also growing more briskly than projected. We have revised up our US forecast for 2014 to 3.1% (consensus: 2.7%) following growth of 2.0% this year (consensus: 1.9%). We expect Fed tapering to begin in September or December.
• The euro area is finally showing signs of improvement in hard data. We look for a continued gradual lift to growth from -0.6% this year to 1% in 2014. Stronger exports and less fiscal tightening are main factors behind the recovery. The ECB is expected to be on hold for a very long time as unemployment remains high and inflation is low.
• China continues to disappoint and we have revised our growth forecast down a notch to 7.9% this year from 8.0%. We look for very gradual improvement in H2.
Read the full report: Global Research
Danske Bank