Handelsbanken: New Macro Forecast: Emerging Asia versus submerging Europe
(Thomson Reuters ONE) -
Global recovery but Southern Europe in 1930s depression
The recovery in emerging Asia is taking hold and will help global growth rebound
in 2013, despite continued recessions in European crisis economies. The US will
not jump off the "fiscal cliff" but rather continue contributing to global
recovery. Imbalances in the eurozone are far from resolved but will not lead to
a financial collapse. Reduced private sector funding of foreign debt in the
"PIGS-economies" is being offset by increased lending from the ECB and eurozone
governments but it is questionable whether this is sustainable in the longer
term.
It seems increasingly clear that China needs to revise its growth strategy. The
new Chinese leadership is aware of the challenges ahead and has signalled a
readiness to address the issues at hand. While labour shortages and structural
deficiencies are likely to limit growth below the average for the recent past,
China will likely remain a strong engine in the global economy. We are also
positive to other emerging Asian economies. Increasingly, the Asia Pacific is
becoming a dominant force in the global marketplace. With the possible exception
of Eastern Europe, we feel that emerging economies as a collective are well
positioned for growth ahead.
The recovery in the US continues to be weaker than during similar episodes in
the past. The dividends from the massively expansionary policies during recent
years are modest. Most importantly, job creation has been far more sluggish. We
thus feel that the authorities' expansionary financial policies have reached a
cul-de-sac. To heal the wounds from the financial crisis and further necessary
adjustments in the economy, policymakers have to consider a battery of
structural measures. To make such a policy initiative possible, the US needs a
broad-based political consensus, which so far seems elusive.
In the eurozone, we still see no permanent solution to the problems in the
crisis economies. While the unemployment rate in Germany has hardly come up from
its all-time low, the ranks of the unemployed in Southern Europe are swelling
fast. We have to go way back in history to find something similar. The situation
in Spain looks like a social catastrophe in the making with almost a third of
the labour force soon unemployed, like the Great Big Depression in the 1930s. We
are sceptical about the prospects for the current crisis management strategy and
would not exclude devaluations and exits from the eurozone eventually.
Sweden is no doubt affected by the adverse external environment. The
manufacturing sector has faced headwinds for a year now and is pulling down the
more domestic parts of the economy. The already soft labour market is expected
to weaken further as a result. Looking ahead into 2013, private and public
consumption are likely to be the main growth drivers, though forecast GDP growth
will remain very slow during most of 2013. This is beyond the control of
economic policy, in our view, but as global trade picks up, we expect Swedish
growth to recover.
Exchange rates tend to respond to a number of influences in the short term, but
over time, real exchange rates tend to mirror relative changes in GDP per
capita. Against this background, we expect many Asian currencies to appreciate
further in real terms. The JPY is an exception, as the Japanese price level is
too high due to yen strength. The same can be said for the eurozone, and in the
absence of EUR depreciation there is a risk of a Japanese scenario playing out
there, with stagnation and deflationary tendencies.
Jan Häggström, Chief Economist
For information: +46 8 701 10 97, +46 70 761 4366,
www.research.handelsbanken.se/
For full research report please go to http://research.handelsbanken.se/Macro-
Research/Macro-Forecast/All-Macro-Forecasts/
Press Release with tables:
http://hugin.info/1225/R/1664470/539943.pdf
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Source: Handelsbanken via Thomson Reuters ONE
[HUG#1664470]
Unternehmensinformation / Kurzprofil:
Datum: 13.12.2012 - 10:02 Uhr
Sprache: Deutsch
News-ID 212405
Anzahl Zeichen: 4840
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Kategorie:
Business News
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