PIMCO: Get Ready for More Global Growth in 2014

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After several years of unprecedented intervention from central banks around the world, the global economy is expected to experience a modest increase in growth next year. However, risks still remain as policymakers have yet to demonstrate they are capable of making a smooth exit.

The global economy managed to grow slowly in the face of many challenges in 2013, but appears set to pick up steam in 2014, according to the latest outlook from Pimco Managing Director Saumil H. Parikh. In the United States, worries over fiscal policy and higher interest rates emerged as the housing market was improving mid-year, while the eurozone remained in a recession for the year. Explosive credit growth and shadow banking become the center of attention in China, and Japan continued to adjust to their new reality of increased dependence on expensive imported energy.

“Despite the diverse nature of these challenges, the global economy was able to grow between 2 percent and 2.5 percent during the year, after adjusting for inflation, equaling its performance from 2012,” explains Parikh. “The global growth story in 2013 was closely linked to the gradual healing in the U.S. economy — see, for example, notable recent improvements in the labor market and stronger household and company balance sheets, all of which has been underpinned by extraordinary central bank policies.”

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