Sunny, with slight chance of overcapacity
Updated: 2014-03-28 08:45
By Li Xiaopeng (China Daily)
Financial people tend to describe markets in meteorological terms, such as market "turbulence" or financial "tsunamis". These words vividly convey market conditions, so I would like to draw on further meteorological analogies to make my points.
The US economic map will be "clear with rising temperatures". Earlier this year, its growth momentum had moderated due to severe conditions, such as a decline in new orders and slow expansion in public spending. But on the back of greater fiscal certainty, easing of tightening measures and near completion of private sector deleveraging, the American economy is on track to achieve greater than expected growth. Official estimates indicate that the US economy will expand at 2.9 percent to 3.4 percent in 2014, which may well herald an early spring for its recovery.
Full-year growth is on track to reach 1 percent. Nevertheless, the recovery process is subject to how well the eurozone tackles below-target inflation and a relatively high level of unemployment.
Emerging economies present a mixed picture. There will be sunny patches as well as overcast ones, and isolated showers are possible. These economies will maintain growth momentum thanks to accelerated structural reforms and internal overhauls, which provides sustained driving force. Yet there will be challenges ahead, posed by outflow of capital, limited policy space for further stimulus and pockets of political instability. But we expect these problems to be temporary, just like a shower that may affect an area for only a short period.