Major economic challenges

Global economy watch - January 2013 PDF download

Pieces of the economic puzzle are being put together in the Europe and the US, but major challenges remain

In the Eurozone the biggest challenge policymakers will face is to keep up the pace of reforms on the fiscal, banking, economic and political fronts. This will be tough in the face of continuing bad economic news and potential social unrest, particularly in the peripheral economies. However, if this process is not disrupted, then by the end of the year we could see a glimpse of how the more integrated Eurozone of the future could look in coming decades.

For the US, 2013 could be the year when policymakers not only avert the immediate fiscal cliff but also agree on a long-term plan to bring down the deficit in the next 10 years, eliminating a significant source of uncertainty and  helping businesses and households plan their future spending. Meanwhile, in the UK, we anticipate a gradual recovery but with risks weighted to the downside, primarily driven by the uncertainty in the Eurozone.