Investing.com - Financial Markets Worldwide

Working Through The U.S. Soft Patch‏

ByDanske Markets
Published 06/14/2013, 07:49 AM
Updated 05/14/2017, 06:45 AM

The U.S. economy is working its way through a soft patch due to substantial fiscal tightening. However, at the same time, the U.S. 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 U.S. forecast for 2014 to 3.1% (consensus: 2.7%) following a 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. 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.

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