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Goldman Sachs is out with its first predictions for how 2012 and 2013 will shape up, and the news isn’t all that thrilling.
Led by Francesco Garzarelli in London and Dominic Wilson in New York, the team set out to forecast what markets, currencies, commodities and even central bank policies would be.
Their estimates are not so rosy. Rather, they paint a somber picture of Europe while world GDP growth falls further from earlier estimates.
Slow Growth For Two More Years in Developed Economies
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The thread holding the global economic picture together will remain one of slow, and in some cases negative, growth. Headwinds from austerity measures which have hit government spending will hit the U.S. and peer nations in Europe. Add in private-sector deleveraging, and a banking system that is on the cusp of further layoffs, and its not too bright. Goldman also sees high unemployment plaguing the advanced nation labor forces.
Source: Goldman Sachs
Emerging Markets Will Remain Resilient to the Challenges
Image: AP Images
Issues that are facing developed nations will not move ot emerging markets. Inflation will begin to ease and economic policy will shift further towards prevention of slow growth. That theme has already proven itself at the end of 2011, as China’s central bank, the People’s Bank of China, cut reserve requirements by 50 basis points at the nation’s largest institutions.
Source: Goldman Sachs
Europe’s Crisis Will Mar Global Growth
The crisis that has enveloped Europe will not disappear at the turn of the year. Rather, Goldman believes it will continue to hold back global growth. The investment bank is decreasing world GDP forecasts by 20 basis points to 3.2% for 2012. Low visibility of a European action plan will continue to negatively effect other markets that are reliant on the continent — particularly banking sectors laden with debt from the region.
Source: Goldman Sachs
Recession in the Euro-area is Becoming Increasingly Likely
Image: UK Prime Minister’s Office
Goldman Sachs now predicts a baseline GDP decline of 0.5% starting this quarter through the start of 2012, which will lead to a full 0.8% contraction. That compares to some of the hardest times during the regions 1992-93 recession. Specifically, the bank now expects mild recessions in the United Kingdom, Scandinavia and parts of Central and Eastern Europe. Expansion in 2013 looks modest at 0.7%, keeping to the tune of slow growth when there is growth.
Source: Goldman Sachs
Equity Markets Will Have An Extremely Difficult Year
Over the coming three to six months, Goldman economists predict the Tokyo Topix, Stoxx Europe 600 and MSCI AC Asia Pacific Excluding Japan Index to all decline. Europe will be hardest hit, seeing equities shedding 16% of their value before slowly returning to levels seen today. The S&P 500 is expected to remain tepid, moving in a small range over the coming twelve months.
Source: Goldman Sachs
In Asia, Equities Will Fare Better
Image: AP Images
While the investment firm shirks European equities, it believes non-Japan Asia has the largest upside potential, possibly to the tune of 14% by year’s end 2012. Goldman estimates earnings per share will grow 5.6% and 12.0% for the region in 2012 and 2013, respectively. The analysts reason that low current valuations, coupled with a still favorable forecast for China will provide the boost. Source: Goldman Sachs
Once upon a time blah blah blah, surely they must realise every sane person stopped liastening to them (Goldman Sachs) years ago, they are the scum of the scum but still they try to preach to the ones silly enough to listen. They’re certainly not going to tell you things they don’t want you to know, please remember that for your familys sake.