MENA growth in 2014 set to increase to 3.8%

The global economy will see a modest uptick in growth in 2014, with the US GDP growth accelerating to 2.6 percent as businesses increase investments, while the Eurozone and China maintain their current growth trajectory but politics, particularly in the United States, could hamper the recovery, according to global asset manager PineBridge Investments.

Meanwhile, "Economies in the Middle East and North Africa (MENA) face a different set of policy challenges in 2014," said Talal Al Zain, Chief Executive Officer of PineBridge Investments Middle East. Mr. Al Zain believes that while economies such as Egypt are working to stabilize their political systems, others, such as the Gulf Cooperation Council economies, must accelerate the process of reducing their dependence on oil exports through continued diversification and moving towards promotion of services and manufacturing.

"We expect economic growth across the region will increase moderately during the year, helped in part by higher oil production and concur with the IMF's forecast of 3.8% real GDP growth for 2014 (up from 2.1% in 2013).[1] In the longer term, a growing young population, increasing consumption and rising budget expenditure should overcome policy challenges in many of these countries, creating promising conditions for investment," Mr. Al Zain added.

On the global front, PineBridge Investments Chief Economist Markus Schomer believes rising capacity utilization and slowing productivity gains will increase the need for US businesses to invest, which should result in higher economic growth. But political wrangling over the debt ceiling could hamper corporate investment plans.

"In Europe and Japan, the key challenge for politicians remains to rebalance economic policy."

"In the Eurozone, austerity is likely to be eased as the fiscal situation improves, and monetary policy is expected to become more accommodative," said Schomer, predicting that the region's GDP growth will stay at the 1.2 percent average recorded since recession ended in early 2013."

"The main roadblock to faster growth is the on-going contraction in bank loans," Schomer said. "European Central Bank rate cuts may not be enough to unclog the lending channel."

In Japan, the government's planned consumption tax hike early next year to reduce the country's fiscal imbalance is likely to cut the growth rate by a half in 2014, and growth in coming years is likely to be dictated by the US Federal Reserve, rather than the Bank of Japan.

"We expect the eventual tightening of US monetary policy will trigger another round of export-boosting yen weakness," Schomer said.

PineBridge Investments' Chief Economist believes that China has successfully engineered a soft landing and GDP growth will stabilise at 7.5 percent in 2014.

"We do not believe growth will slow further from here," SchomAir VaporMax Shoes