Tags: Global | Outlook | Optimism | Caution

USA Today: Global Outlook, Optimism Salted With Caution

By    |   Wednesday, 22 January 2014 08:54 PM

Growing optimism about the outlook for the global economy could be a sign that growth and hiring will be on a positive track this year. But recent reports still cite reason for caution, says USA Today.

One beacon of optimism came from the World Economic Forum in Davos, where PricewaterhouseCoopers released its 17th Annual Global CEO Survey.

Of 1,300 chief executives worldwide, 44% expect the world economy to improve this year. That compares to only 18% having a positive outlook in the 2013 survey, says USA Today.

More than 60% of the U.S. CEOs surveyed by PwC expect to hire more people this year. According to PwC, that's the highest level of headcount additions in the past five years of surveys.

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Another upbeat report came from the International Monetary Fund, which released a World Economic Outlook update this week.

Global economic activity strengthened in the second half of 2013, the IMF said. Further improvement is expected and global growth is projected to be higher than previously forecast, likely around 3.7% in 2014 and 3.9% in 2015, the IMF added.

But as USA Today points out, both reports are salted with caution. PwC refers to the improved sentiment among CEOs as “fragile optimism.”

With serious global risks off the table, at least for now, many CEOs are thinking about growth. But many are also still “very worried” about over-regulation and governments' abilities to rein in their debt and deficits, PwC reported.

Corporate leaders also aren't as enthusiastic about emerging markets as in the past. Many CEOs are reviewing their overseas portfolios, PwC reported. And, this year they view the U.S., U.K. and Germany as more attractive than some of the BRICS markets, as compared to last year.

Likewise, the IMF's outlook for strong growth is mostly attributed to the prospects for advanced economies, with U.S. growth expected to be 2.8% in 2014 compared to 1.9% last year. But globally there are both old and new “risks to the forecast,” the IMF notes.

Very low inflation has come to the fore as a potential problem in advanced economies, especially the euro area.

It is also critical to avoid premature withdrawal of monetary-stimulus policies, including in the U.S, as output gaps are still large, says the IMF.

In emerging markets increased volatility in financial markets and capital flows remains a concern, given that the Fed is beginning to taper. Portfolio shifts are likely, and some countries, especially those with weak economies, may see sharp capital outflows and exchange rate adjustments, says the IMF.

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Growing optimism about the outlook for the global economy could be a sign that growth and hiring will be on a positive track this year. But recent reports still cite reason for caution, says USA Today.
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2014-54-22
Wednesday, 22 January 2014 08:54 PM
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