A very positive report on the global economy has been released by ANZ’s macro strategy team.
The bank expects an uplift in the rate of global growth from 2.9% to 3.6% in 2014 as the United States and Eurozone pick up.
And crucially, for monetary policy, the large output gaps (think spare capacity)in individual and global economies means this growth should arrive without any threat of a speed up in inflation.
So even if the Fed tapers it’s not going to have to take the foot entirely off the monetary accelerator any time soon.
There have been a lot of false starts to the global recovery over the past few years.
But ANZ says the momentum in 2013 is continuing and the global economy is heading into 2014 on a steadier footing than it has in in the last couple of years.
“Global IP growth in 6-month annualised terms has lifted from 0.0% in September 2012 to 3.3% in September 2013. The lift in IP growth followed the base in the ANZ GLI in July 2012,” the macro team wrote in the report.
That’s some acceleration.
ANZ’s outlook is by default also a positive one for the Australian economy, which will be buoyed by improving growth in the US supported by reasonable growth momentum in the Japanese economy, and a little bit of European growth thrown in for good measure.
Couple this with a Chinese economy that might stay the course and print solid numbers in the 6-7% region, and the Australian Economy is going to do well again in 2014 and the Aussie dollar just might continue to confound the Reserve Bank and Governor Stevens by refusing to fall as far as he wants.