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Global
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September 09, 2013

By Global Economic Team|

European Economics: Slow Slog, No Growth Spurt: Reiterating our forecast for sub-par growth: Despite the long-awaited recovery now coming through in the data, we stay cautious on the euro area growth outlook. In our view, the growth momentum will lag behind that of past recoveries and other major economies and also stay below the historical trend. After an upwardly revised contraction of 0.5%Y this year, we continue to expect GDP to expand by a sub-par 0.9%Y next year. As such, euro area growth remains vulnerable to external shocks and domestic policy mistakes. Elga Bartsch

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Back-to-School Global Macro Outlook: Acceleration, Stabilisation and Accommodation: Our global narrative for the next 6-12 months rests on three pillars: An acceleration of growth in DM, stabilisation in EM economies (with downside risks) and continued accommodation by central banks.

Downgrading global growth: Since our last global forecast update in June, better growth prospects for DM economies and related fears of less accommodative monetary policies have pushed up real interest rates, weighing down hard on EM assets, currencies and economies. As a consequence, we are lowering our sights on economic growth.  Joachim Fels, Manoj Pradhan. 

US Economics: US Outlook: From Resilience to Sustained Expansion: The US economy has traversed a rocky road thus far in 2013. Obstacles have included significant fiscal drag, concerns about the Fed's withdrawal of policy stimulus, and the faltering expansion of key emerging markets. Vincent Reinhart

ASEAN Economics: What Does A Cross-Current of DM Recovery, Rising Real Rates & China Slowdown Mean for ASEAN? What's new? We are downgrading our 2013/2014 ASEAN4 GDP growth numbers from 4.8%/5.3% to 4.5%/4.6%. Our first stab at 2015 looks for a growth pickup to 5%. The downgrade reflects a weaker-than expected 1H13, and a more clouded outlook. Indeed, apart from idiosyncratic country factors, ASEAN now faces a more disparate cross-current of macro forces from: (a) a DM recovery which would help buoy exports; (b) exogenous tightening from a less easy Fed policy; and (c) further China slowdown which would have collateral impact on commodity prices.  Deyi Tan

Asia Pacific Economics: Rise in Real Rates + Slowdown in China = Slower Growth Where are we in the growth cycle? After a short-lived growth recovery late last year, GDP growth for the region decelerated again, averaging 6% in 1H13 compared to 6.6% in 4Q12. The deceleration in economic growth was reflected across both domestic and external demand. Exports for the region continued to decelerate sequentially almost all throughout 1H13, which led to weaker production activities. Moreover the weak external demand affected corporate sentiment, which had the added effect of slowing capex activity across the region. Consumption growth, as proxied by retail sales, has since stabilized at lower levels after decelerating earlier this year.  Asia Pacific Economics Team

China Economics: Growth Stabilization Helps: Acupuncture-Style Reform: We believe growth stabilization in the near term will offer a favorable backdrop for policy makers to continue to roll out acupuncture-style reform measures. In the aftermath of the liquidity crunch in the interbank market in June, downside risks from the recent tightening in financial conditions are being offset by a more growth-friendly policy stance in the short term.  Helen Qiao



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