An economic slowdown in China, elevated geo-political tensions between Russia and Ukraine, and the Fed's tapering of its stimulative asset purchase program are some of the biggest events in markets.
But there are so many more market stories we need to be watching.
In it's latest 52-page Global Economic Outlook and Strategy report, Citi's Willem Buiter and his team give us a sense of where the world's major economies are headed.
The economists expect the global economy to expand 3.1% this year and 3.4% in 2015.
Citi's Michael Saunders writes that they continue to cut their emerging market growth forecasts, though "this month’s revision largely reflects a large cut to our Russia GDP forecast, reflecting heightened uncertainty and the CBR’s recent rate hike."
In China, Saunders expects policymakers to react to slower growth by "renewed credit easing."
Among developed economies, Citi expects higher growth from the euro area, UK, and Sweden raising their forecasts, but cut Japan's growth forecast. In the U.S., Citi expects the recent winter weakness to be reversed and thinks rate hikes won't come till mid-2015.
We highlight a few of their viewpoints for each of the world's most important economies including GDP forecasts through 2018.
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North America
The U.S. faces two-way risks delayed tightening of faster QE exit.
GDP Growth Forecast
- 2014: 2.8%
- 2015: 3.1%
- 2016: +3.2%
- 2017: +2.7%
- 2018: +2.2%
"The Fed continues to shift policy accommodation away from asset purchases and toward anchoring forward rates," wrote Citi's Robert DiClemente. " We continue to expect preparations for rate hikes in the spring of 2015, with modest tightening beginning in the summer. We see two-way risks here: continued low inflation could delay tightening, while a faster recovery and wage gains could speed up exit."
Source: Citi
Canada's economy continues to outperform expectations.
GDP Growth Forecast
- 2014: +2.3%
- 2015: +2.7%
- 2016: +2.7%
- 2017: +2.6%
- 2018: +2.4%
"Despite repeated shocks and lingering uncertainties, the economy continues to outperform expectations. Importantly, the expansion is gaining momentum,"writes Citi's Dana Peterson. "Key supports to the expansion continue to include diminished tail risks abroad, reduced fiscal restraint in the US, the cheaper CAD, and North American energy infrastructure expansion. Internal demand rotation, commodity price volatility, softer EM growth and domestic competitiveness worries likely will remain as headwinds."
Source: Citi
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