Arab Today, arab today qnb addresses 2014 most prominent trends in the global economy
Last Updated : GMT 20:01:04
Arab Today, arab today
Arab Today, arab today

QNB addresses 2014 most prominent trends in the global economy

Arab Today, arab today

Arab Today, arab today QNB addresses 2014 most prominent trends in the global economy

Doha - QNA

The Weekly analysis of Qatar National Bank (QNB) Group expected 2014 to mark the end of the unprecedented monetary stimulus central banks around the world have engaged in since the global recession of 2009. This, in turn, will imply higher global interest rates, a healthy downward adjustment in asset prices and a rotation away from vulnerable EMs in favor of selected advanced economies. The road for the global economy is likely to be bumpy in the process. QNB said in a press release today that 2013 was marked by three significant developments in the global economy. First, the euro area finally came out of a long recession and confidence in the single currency was restored. This has enabled Ireland to exit the bailout program it entered in 2010. Ireland and Spain (and to a lesser extent Greece, Italy and Portugal) are also seeing the first signs of economic recovery. This trend is likely to continue in 2014. Second, much of the worries about a hard landing of the Chinese economy turned out to be unfounded. Since 2009, the Chinese economy has grown by an average 9.2% a year and has contributed about half of the global output expansion. A slowdown in the first half of 2013 turned out to be temporary and the Chinese economy is now accelerating again, driven by an expanding middle class and a shift from the traditional export-led model to a more domestic consumption-driven one. As a result, QNB Group expects 8.0%-8.5% Chinese growth next year. Third, the announcement on May 18, 2013 of a potential scaling back of the Fed s asset purchase program the so-called tapering of Quantitative Easing (QE) turned the winds against most EMs. Global capital flew out, leaving EMs with large current-account deficits scrambling for cover. Brazil, India, Indonesia, South Africa and Turkey all experienced a substantial weakening of their currencies and a slowdown in economic activity. Brazil, in particular, entered into a recession in Q3 2013. According to QNB weekly analysis, Capital flight is likely to continue as QE tapering is implemented next year. As a result, EMs will be forced to reduce their own economic growth in order to bring their current account deficits back to a sustainable level by tightening both fiscal and monetary policy. So, where is the global economy heading in 2014? The answer lies in the direction of monetary policy going forward. Central banks around the world have engaged in an unprecedented monetary stimulus to get the global economy out of the Great Recession of 2009. In doing so, they have flushed the global economy with unprecedented amounts of liquidity. The Fed, for example, has increased its balance sheet fivefold to USD4tn by purchasing US long-term government debt and mortgage-backed securities. This has reduced long-term interest rates (including mortgage rates) to historic lows, fueling house prices and equity indexes (see chart). In the meantime, the US economy is still struggling to gather significant momentum to achieve its long-term growth potential, the press release said. On December 18, the Fed announced that it will reverse course starting in January 2014 by tapering QE. Inevitably, this will lead to higher long-term interest rates. According to QNB Group, the US 10-yr bond yield is likely to rise to 3.5% in 2014. This will have a negative impact on the US housing market and construction activity. It will also reduce the wealth effect currently fueling higher US domestic consumption. In the same vein, equity prices are likely to be affected by higher interest rates through higher discounting of future earnings and lower dividends from weaker growth. For 2014, this may imply a healthy downward adjustment in asset prices, bringing them to a more sustainable level in line with fundamentals. Other central banks are following the Feds example. The ECB issued nearly EUR530bn in crisis loans to European banks in March 2012, half of which have now been repaid. The Bank of England has announced that it will no longer increase its QE program and will instead start increasing interest rates once unemployment falls below 7%. The only exception is the Bank of Japan, which is sticking to its goal of doubling the money supply by outright purchases of government bonds. Overall, the change in direction of monetary policy signals the end of an era of unprecedented cheap money. As interest rates rise globally, a downward adjustment in asset prices is inevitable. At the same time, a rotation away from more risky EM investments to safer asset classes in advanced economies is likely. According to QNB Group, this change in direction is going to be bumpy for the global economy as higher interest rates and lower asset prices will inevitably feed into weaker global consumption and investment.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today qnb addresses 2014 most prominent trends in the global economy Arab Today, arab today qnb addresses 2014 most prominent trends in the global economy

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today qnb addresses 2014 most prominent trends in the global economy Arab Today, arab today qnb addresses 2014 most prominent trends in the global economy

 



Arab Today, arab today
Arab Today, arab today Youssra depended on colored foam

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today Lufthansa chief eyes up to 78

GMT 11:29 2017 Thursday ,21 September

Lufthansa chief eyes up to 78
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today Rouhani at UN defends Iran nuclear deal

GMT 09:41 2017 Thursday ,21 September

Rouhani at UN defends Iran nuclear deal
Arab Today, arab today Saudi Arabia to unblock internet calling apps

GMT 11:31 2017 Wednesday ,20 September

Saudi Arabia to unblock internet calling apps
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Ministry seeks to improve education

GMT 14:49 2017 Sunday ,17 September

Ministry seeks to improve education
Arab Today, arab today China lifts 10-year travel ban

GMT 18:09 2017 Thursday ,21 September

China lifts 10-year travel ban
Arab Today, arab today Puerto Rico, Virgin Islands brace

GMT 12:01 2017 Wednesday ,20 September

Puerto Rico, Virgin Islands brace
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Intel chips loaded in Waymo

GMT 14:43 2017 Wednesday ,20 September

Intel chips loaded in Waymo
Arab Today, arab today Five trends at the Frankfurt auto show

GMT 12:04 2017 Monday ,18 September

Five trends at the Frankfurt auto show
Arab Today, arab today Actress Ream Hhagag prepares for a new film

GMT 09:40 2017 Tuesday ,19 September

Actress Ream Hhagag prepares for a new film
Arab Today, arab today France hopeful of persuading Trump

GMT 06:21 2017 Wednesday ,20 September

France hopeful of persuading Trump

GMT 12:14 2017 Monday ,18 September

Horia Farghaly happy for success of “Case G”

GMT 10:35 2017 Thursday ,14 September

New Zealand opposition looks

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha

GMT 19:18 2017 Monday ,18 September

5,000 'Dieselgate' deaths in Europe per year

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 04:49 2017 Wednesday ,20 September

WHO urges Yemen to accept vaccines

GMT 16:04 2017 Tuesday ,19 September

Egypt tourism revival steady but slow

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 12:46 2017 Thursday ,21 September

Google likely to buy stake in Taiwan smartphone maker HTC

GMT 11:37 2017 Saturday ,12 August

Fashion designer reveals her new collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday