Photo: Bloomberg Television
Industrial machinery behemoth Caterpillar announced its Q4 2012 financial results this morning.And in its announcement were some macro economic observations.
“Overall, we expect the world economy will begin the year with weak growth and improve as 2013 unfolds,” they wrote. “We anticipate overall world economic growth of at least 2.5 per cent—a small improvement from our estimate of 2.3 per cent for 2012.”
They attribute some of this acceleration to global low interest rate policy by the world’s central banks.
Here are the three relevant bullets from their announcement:
- Central banks reduced interest rates over the past 15 months and some further cuts are possible. With inflation low, we expect there will be little pressure to tighten policies in 2013. With the exception of Europe, monetary easing will likely offset much of the impacts of tighter fiscal budgets. Overall, we expect economic policies will be the most favourable for growth since 2010.
- One sign lower interest rates are working is that both manufacturing and service purchasing manager indices improved over the past few months. Both ended 2012 at values that signal growth.
- Another positive sign is that metals prices have improved from their mid-August 2012 lows, and fourth-quarter data for China indicates increased imports of coal, iron ore and copper.