PwC: Eurozone “gets mojo back”, Brazil wins World Cup in 2014


The outlook is almost surprisingly optimistic in this month’s Global Watch Report from international business consultancy/services firm PricewaterhouseCoopers with promises that advanced economies including the Eurozone will “get their mojo back” in 2014 – but advance the very real possibility that “significant flareups” of economic crisis on The Continent could occur.”

PwC’s Global Watch Report for January begins with “Advanced economies get their mojo back: For the first time since 2010 we expect advanced economies to contribute about 40% to global GDP growth[,] indicative of the improving consumer confidence that we are already seeing in our monthly Global Consumer Index…”

PwC backs this prediction up with “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 purchases.”

Despite a projecting 0.5% year-on-year decrease in the ratio of world GDP contributed by the Eurozone in 2013, PwC is now nevertheless forecasting overall growth of 0.8%, 1.2% and 1.5%, respectively, over the next three years.

While this tone appears more positive against that of PwC’s ‘Report from December which could only describe the Eurozone as “at least not a drag on global GDP,” the analysts at that time put Eurozone GDP growth at 0.9% for 2014. A rate of 0.7% would be need to rejuvenate the bloc’s economies to an overall pre-crisis level by 2015.

A bit more sobriety is indicated further on in the ‘Report, with PwC cautioning that “the Eurozone crisis is in remission, but we still assign a one-in-four probability of significant flare-ups occurring in 2014.” The Eurozone currently comprises approximately 16.9% of world GDP by current market exchange rates, and was the sole region among the 18 listed in PwC’s analysis for the year.

Worthy of note, though unsurprising: The world market leader remains the United States, with 22.5% of world GDP, while the biggest y.o.y. gain in ’13 was posted by China, with a nice 7.7% jump.

Among various other forecasts and predictions offered by PwC were the following.

• GDP for Greece will grow 0.8% y.o.y. in 2014 while PwC remains “cautiously optimistic that peripheral countries like Greece and Portugal will post positive but low GDP growth rates;

• Ireland is pegged as the peripheral economy to perform most robustly;

• emergent economies Brazil, India, Indonesia and Turkey to will face a “triple challenge” of cyclical economic slowdown, deficit issues, and a squeeze on foreign-currency flow;

• a fourth challenge may be added with the fact that, as in Hungary, 2014 is an election year in these countries with concomitant short-term volatility expected;

• the expected upswing in US and Eurozone economies will result in a higher demand of oil; and

• this in turn will lead to boom times for Russia in particular, which will “record strong GDP growth because of the importance of energy-related exports” [MOL shareholders are certainly making note as well].

Finally, the PwC analysts went with a relatively easy choice for the upcoming year: “Brazil is our favorite to win the FIFA World Cup … We think its world-class track record combines its home-country advantage (sic) to give it the edge it takes to win the Cup.”

Hardly a stretch for PwC, there: Team Brazil is thus far the prohibitive favorite, with most sportsbooks offering 3/1 or 10/3 odds on the five-time World Cup titlists. More challenging might have been to pick the runner-up. Anyone else like Team Germany (5/2 odds to finish second)…?

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