“Overall we see a decrease in extreme risks to the global economy, with currently existing risk factors posing no significant threats. Thus a stable and positive context for the global economy in 2014, with the prospect that economic data next year will continue to improve. These are the words, finally full of optimism, of Andreas Utermann, Allianz global chief investment officer, who in the usual annual conference held in Milan also distanced the dangers arriving from the United States: “Debt ceiling disputes in the US, resolved only temporarily, could fuel a climate of renewed uncertainty in the coming months, however we believe that the global economy will continue to recover, albeit at a moderate pace.
A phase of cyclical recovery is coming, therefore, with moderate economic growth, even if despite improving fundamentals, investors will have to get used to the idea that the markets will still be dominated by fiscal and monetary policies implemented by central banks around the world, starting with the Federal Reserve. Andreas Utermann commented: "Developed countries are only now starting to address unsustainable levels of sovereign debt, so investors should expect a continuation of the current low interest rate policy adopted by central banks in different countries."
In fact, the tensions weighing on the global currency markets worsened in 2013 and could worsen in 2014. First of all, the significant weakening of the yen and the US dollar, which has reached its lowest levels for many years, is causing friction in the global economic community and the markets must not overlook the possibility that the situation could escalate into an outright currency and trade war. Furthermore, the (only postponed) resolution of the US fiscal impasse and continued political uncertainties in the Eurozone could fuel market instability in 2014. However, the main risk for investors continues to depend on the dynamics of the financial repression.
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Attachments: AllianzGI_presentation outlook 2014_03.12.2013.pdf
