Overview

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Overview

Overview

Global Economic Outlook, Q1 2014

This first quarter edition of the Global Economic Outlook offers timely insights from Deloitte Research economists about China, the United States, the Eurozone, Japan, India, Russia, the United Kingdom, and Brazil. In addition, this issue’s special topics consider commodity price cycles and the brand appeal of emerging markets.

Several countries have recently passed significant economic hurdles. In China, the government finally announced long-awaited reforms that are intended to change the structure of the Chinese economy and allow growth to continue at a rapid pace. In the United States, a severe crisis was averted, but a government shutdown did have a negative impact on economic activity. In Japan, inflation has returned, and there continue to be signs that Abenomics is having a positive impact. The Eurozone has exited from a long and deep recession. Finally, a number of major emerging markets have quickly gone from an environ­ment of optimism about future growth to one of uncertainty.

Introduction
By Dr. Ira Kalish

China: Stepping into the unknown
By Dr. Ira Kalish 

China’s government recently announced ambitious plans that could make the Chinese economy more market driven, consumer driven, transparent, and prone to profitable investing. Implementation remains a significant challenge, but it is crucial to rectifying the country’s currently unbalanced system.

United States: Breaking the holiday tradition—ringing in the New Year with less fiscal stress
By Dr. Patricia Buckley

The United States celebrated the New Year with economic pain rather than champagne as it coped, once again, with the fiscal crisis that never was. However, fundamentals remain strong, and growth engines should begin to pick up steam by the second half of 2014.

Eurozone: Three areas to watch in 2014
By Alexander Börsch

Three interrelated factors are critical to the Eurozone’s growth performance in 2014 and beyond: accelerating business investments, stabilizing credit conditions, and decreasing uncertainty.

Japan: Inflation returns
By Dr. Ira Kalish

With inflation accelerating consumer spending and a declining yen boosting exports, Abenomics seems to be working. However, uncertainties about an anticipated tax increase and the degree to which the government will engage in deregulation continue to cloud the country’s growth projections.

India: Can India overcome adversities and bounce back?
By Dr. Rumki Majumdar

Despite a period of slow growth, high inflation, fiscal deficits, external imbalances, political uncertainty, and poor business confidence, India has an opportunity to restore growth by implementing policies that make better use of its considerable assets.

Russia: No quick fix
By Akrur Barua

Subdued investment, weak export markets, rising household debt, declining confidence, and deteriorating demographics continue to weigh on Russia’s economy.

United Kingdom: Gaining momentum
By Ian Stewart

Britain is expected to have the fastest growing economy in Europe in 2014, but growth remains historically modest. The United Kingdom will need a strong rebound in capital spending and in consumer incomes to maintain its improving prospects.

Brazil: Festive season blues
By Navya Kumar

Deteriorating fiscal balances, an increasing external deficit, high inflation, poor business investment, and currency troubles continue to hamper Brazil’s economy.

Special topic: The boom and beyond: Managing commodity price cycles
By Navya Kumar and Akrur Barua

The end of the commodity price boom is leaving many countries scrambling for ways to diversify their economies accordingly.

Special topic: Are emerging markets losing their brand appeal?
By Dr. Rumki Majumdar

Many emerging markets faced financial volatility in the wake of the US Federal Reserve’s discussion about tapering. Countries with poor fundamentals and weak policies have been hardest hit during this period of uncertainty, and sustaining growth will require a renewed focus on fundamentals.

Economic indices

GDP growth rates, inflation rates, major currencies versus the US dollar, yield curves, composite median GDP forecasts, composite median currency forecasts, OECD composite leading indicators

About The Author

Dr. Ira Kalish

Dr. Ira Kalish is chief global  economist, Deloitte Touche Tohmatsu Limited

Global Economic Outlook, Q1 2014: Overview
Cover Image by Jessica McCourt