How will be the Global Economy in February 2014?

How will be the Global Economy in February 2014? 

  

                         Every four to six years, the countries experience an economic slowdown. It happens like clockwork. The current bull market is now in its fourth year. The markets are performing well. But, Unemployment remains high, as does household debt. Gross domestic product (GDP) is essentially flat. Housing may be the one bright spot, but even that sector is fragile at best.

                        Congressional Budget Office (CBO) feel about the economic outlook in 2014 is pessimistic. The CBO expects the U.S. economy in 2014 to remain moribund and for unemployment to remain near eight percent. But it gets better. It also projects that both actual and potential real GDP will eke out 2.25% annual gains between 2019 and 2023.

                         The extra dollars pumped into the economy were supposed to spur economic growth. It had the reverse effect, shrinking the buying power of each dollar, the driving force of inflation. As the U.S. dollar continues to decline in value against other world currencies, goods imported into the U.S. become more expensive.

                        Gross debt levels in many nations, including Japan, Greece, Italy, Portugal, and Ireland, are all high. Public debt is also high. Reducing government debt takes a long time; especially with continued global economic headwinds. That said, even under the best circumstances, it can take years. Case in point: now, 15 years after debt rose above 100%, it’s only marginally lower.

                        Successful debt reduction requires fiscal constraint and policies that support growth. This includes supportive monetary policy and measures that address structural weaknesses in the economy. Those ingredients are not currently in place.

                       After five years of support from the Federal Reserve, economic growth is anemic. Economic instability, political deadlock, the business community’s mistrust of the government, concerns over its fiscal health, deterioration in the development of its financial markets, and a weak American dollar have cut into corporate America’s bottom line.

U.K:

                      The U.K. recovery is well underway, with real GDP registering a 0.7% q/q gain in the fourth quarter of 2013 in line with expectations. We can continue to expect the quarterly pace of growth to moderate gradually over the course of 2014, leading to an overall expansion of 2.5%.

                      The outlook for key emerging market economies in Europe has deteriorated in the face of heightened foreign exchange volatility. We have to lower our growth forecasts for both Russia and Turkey in 2014-15, with currency weakness expected to extend through the forecast horizon despite intervention by the monetary authorities.

Canada:

                       Outlook for the Canadian economy is unchanged from last month. Real GDP growth is expected to pick up to an average of 2½% in 2014-15, as strengthening U.S. and global growth and a more competitive currency lift exports and business investment. At the same time, consumer and housing activity are expected to be restrained by a lack of pent-up demand and high household debt burdens.

                       Virtually all sectors are expected to contribute to the pickup, with pent-up demand and an improving job market underpinning consumer and housing activity, rising business confidence lifting capital outlays, and governments easing back on fiscal restraint. In Canada, federal austerity already in place plus stronger growth is expected to result in a size able contraction of the fiscal 2014-15 federal deficit.

Mexico:

                        As a result of the recent depreciation of the Mexican peso against the U.S. dollar, we have to revise slightly our currency forecast, particularly for the first quarter of the year. In our view, currency volatility will remain high in the coming months, responding to the U.S. monetary policy adjustment. Nevertheless, we expect the currency to stabilize in Q2, followed by a slow pace of depreciation in the second half of 2014.

In 2014, we will still be waiting to see the results:

                       Future economic growth will depend on its ability to innovate, create, and reinvent the way it does business. And it will need to meet the growing and evolving untapped demands of an increasingly challenging global environment. The actions taken since 2008 have put our country’s economic future on the back burner.

                      The economic outlook for 2014 is grim. In 2014, investors should be very worried—and they should be prepared