Citi Research released a new research report titled “Global Economic Outlook and Strategy — Prospects for Economies and Financial Markets in 2014 and Beyond” on Monday. The report (written by Willem Buiter and colleagues) was relatively positive on global economic conditions, saying economic growth should continue to improve modestly and not auguring any major bumps in the road over the next 12 months.
Global economic growth outlook 2014
The report offered a sanguine economic outlook for 2014, saying improved economic growth is likely. “We expect a modest reacceleration in global real GDP growth (at market exchange rates) from 2.4% in 2013 to about 3.1% in 2014, the best since 2010, with growth in advanced economies (AEs) up from 1.1% in 2013 to about 2.0% in 2014. Growth is likely to be around 3% in the US and UK in 2014-15.”
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Japan was, however, singled out as the exception to the growth story. Citi projects Japan’s growth will “…slow significantly during 2014 as the consumption tax hike bites.”
Emerging markets slowdown
While Citi expects emerging market economic growth to remain above the relatively anemic growth rates of advanced economies, they do anticipate a significant slowdown in most emerging market economies. They go further to predict the slowdown will result in the smallest AE-EM growth gap since 2002. They argue the implications of the looming Fed “taper” will continue to be a drag on EM economies throughout 2014.
Monetary policy outlook