The process of market normalization is continuing and growth in OECD countries is gaining momentum, while world trade is recovering. These are the main assessments made by Unicredit Research, led by chief economist Erik F. Nielsen, who presented its Outlook 2014 forecast report today in Milan.
Unicredit confirms its fundamental forecast: “We believe that these Improvements will continue throughout 2014, when the Eurozone too will finally be able to shift gears and enter a phase of sustainable recovery. In a context that continues to be characterized by abundant liquidity in the main developed economies, this should guarantee good support to the financial markets” comments Marco Valli, Chief Economist for the Eurozone of UniCredit.
The bank in Piazza Cordusio estimates that in 2014 GDP growth in the Eurozone will accelerate to an average annual figure of +1,5% compared to -0,4% in 2013, as the consolidation of global growth, more favorable company fundamentals and a hitherto unexpressed demand for capital goods will lead to a recovery in investment and trade within the area. This will have positive impacts on the labor market, but at a slow pace and with significant differences between countries.
As for rates, they are set to remain unchanged for most of 2015. In a context of normalizing growth, mitigating sovereign risks and exceptionally low monetary policy rates, spreads within the Eurozone will continue to narrow also in 2014, albeit at a slower pace than 2013. The target for the BTP Bund spread is 180 basis points at the end of the year. As for currencies, UniCredit economists expect the normalization process to further weaken the yen and, to a lesser extent, the Swiss franc. The euro-dollar exchange rate is expected at 1,40 at the end of the year, partly thanks to the fact that the world central banks will begin to restore the traditional weight of reserves in euros. Meanwhile, at around 16,30 pm, the Unicredit stock lost 1 % at Piazza Affari, a 5,52 euro.
