2014 will be the year when advanced economies* pick up speed and the Federal Reserve continues
its cautious withdrawal of monetary support by tapering and ultimately halting its quantitative
easing (QE) purchases.
So, which areas should businesses focus on in 2014?
Strategy/Growth: Don’t forget your core markets. Advanced economies are poised for significant growth in 2014 and can provide a boost to revenue growth.
Financing: Adjust your funding plans to prepare for a world where the cost of debt increases on the back of tighter monetary conditions by the Federal Reserve.
Risk monitoring and mitigation: In our view, the Eurozone crisis is in remission but we still assign a one- in-four probability of significant flare-ups occurring in 2014. We continue to recommend that our clients to stress test their business plans as part of their regular risk-management process. This exercise comes with the cost of implementation but with the added benefit of having a more secure, robust and resilient business model.
Our other predictions for 2014:
Brazil is our favourite to win the FIFA World Cup in 2014. We think its world-class track record combines its home country advantage to give it the edge it takes to win the Cup.
We project the GDP of all but one of the G7 economies to rise back above their 2007 levels. Italy the only exception.
By the end of 2014, we expect that 22 economies around the world will still be smaller than in 2007. Of these, nine will be in the Eurozone.
We anticipate 13 economies will grow faster than China in 2014, including Bhutan, Gambia and Libya. Meanwhile, Sub-Saharan Africa will grow faster than global GDP (at market exchange rates) for the 14th year in a row.