10 Jul 2013
Flash: Risk of QE extension affecting EM – Deutsche Bank
FXstreet.com (New York) - While the markets digested the potential impact of tapering, yesterday saw the IMF reduced its global economic forecasts for 2013 and 2014 in its latest World Outlook, note Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
Specifically, World GDP was cut by 0.2ppts in both 2013 and 2014 to 3.1% and 3.8%, respectively. This is largely driven by an appreciably weaker domestic demand and slower growth in several key EM economies, as well as by a more protracted recession in the euro area. US GDP was similarly reduced by -0.2ppt over this year and next to 1.7% and 2.7%. “With expectations of the global recovery being pushed by many, it does highlight the risk that the Fed is taking if it indeed does pull back from stimulus in coming months.” they add.
Specifically, World GDP was cut by 0.2ppts in both 2013 and 2014 to 3.1% and 3.8%, respectively. This is largely driven by an appreciably weaker domestic demand and slower growth in several key EM economies, as well as by a more protracted recession in the euro area. US GDP was similarly reduced by -0.2ppt over this year and next to 1.7% and 2.7%. “With expectations of the global recovery being pushed by many, it does highlight the risk that the Fed is taking if it indeed does pull back from stimulus in coming months.” they add.