Business is again starting to accelerate in the emerging regions, after the slowdown that started in mid-2011 following the euro-zone crisis, according to Dexia Asset Management.
In its outlook, Anton Brender, chief economist of Dexia AM said: "The reduction in global imbalances is curbing activity and will continue to do so for several years yet.
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"The slow re-acceleration of growth in the emerging regions should still support US activity, especially as, since the new millennium, America’s manufacturing industry has been outperforming its main rivals, benefitting notably from a weaker dollar.
"The rise in household wealth, boosted by the rebound in property prices and in the stock markets, should help households maintain their savings rate at current levels. Consumption should, accordingly, improve in line with wages. The current pace of recovery on the job market is, from this point of view, reassuring."
Unfortunately, the fiscal debate is far from over, said the Dexia AM outlook. In the meanwhile, according to Dexia AM, even if activity accelerates from an average of 2% in 2013 to 2.5% in 2014, monetary policy will remain accommodating.
With the implementation of Outright Monetary Transactions programme by the European Central Bank (ECB) has gone a long way to reducing tensions on the sovereign debt market, said the outlook.
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By GlobalDataDexia AM economist, Florence Pisani, said: "Companies’ perception of weak demand makes a prompt rebound in their investments highly unlikely.
"If there’s no change in strategy, activity will remain precariously weak and the risk of falling into the austerity trap will become a real one for a growing number of countries in the zone."
