Goldman Sachs has taken out its crystal ball to make its economic forecasts for next year, ranging from the recovery of the US housing market to stagnant growth in the European Union. Financial News takes a look at the macro themes Goldman’s analysts think will dominate markets in 2013.
1.Global growth: A ‘hump’ to get over, then a clear road aheadThe analysts predict weak growth in early 2013 but, if that period is successfully navigated, we could see a sustained recovery once the world economy gets over the risks to growth in the first part of the year from fiscal restraint. Goldman predicts global growth for 2013 of 3.3%, broadly in line with 2012. US gross domestic product growth is seen stuttering at around 2%, there will be a near-recession in the euro area and Chinese growth is seen falling below the average of the last five to 10 years.But the analysts say that below the surface, there are significant differences from 2012. “Further healing in the US housing and labour markets; a progressive relaxation of the global energy supply constraint; and ‘room to grow’ particularly in the developed world,” they said. If the 'hump' can be navigated, Goldman envisages a "sustained sequential recovery in growth, which builds into 2014 and beyond."
2. Housing stabilisation and private-sector healing in the USThe US housing sector has picked up this year and is set to continue – the analysts predicted that we will see a 20% growth in housing starts and a 2-3% growth in home prices in 2013. They said: “[We will see] further modest US home price gains and continued increase in housing activity.”
3. Stable China growth, but not like the old daysThe pace of Chinese growth will stabilise at a touch above 8%, the analysts predicted. Their risk analysis of China suggested that key assets, such as Chinese equities, had reflected large downgrades to China’s growth view. They said: “While there has been a meaningful rebound in the market’s pricing of China risk in the last three months, there may still be scope for stability alone to provide relief.”...MORE