Tuesday, January 5, 2010

Global Macro Preview 2010- Morgan Stanley

We expect the major central banks to start exiting
their expansionary policies around mid-2010. The
prospect and process of withdrawal may have unintended
consequences: We think government bond markets
will be the first victim.

A tale of two worlds: We forecast 4% global GDP
growth in 2010, but this masks two very different stories:
barely 2% average GDP growth in the advanced
G10 economies but 6.5% growth for emerging markets.
More G3 growth differentiation: We see the US as
the growth leader among this group, with 2.8% growth
in 2010. The euro area economy looks set to grow by
less than half that rate (1.2%), while Japan should
hardly grow at all (0.4%).

Sovereign and inflation risks up: The next crisis is
likely to be a crisis of confidence in governments’ and
central banks’ ability to shoulder the rising public sector
debt burden without creating inflation.

Read the full research report here :


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