In the January economic update video for eZonomics, ING senior economist Teunis Brosens laid out improvements made in the economies of the United States, Eurozone and China – as well as challenges being faced.
Fiscal cliff refers to an economic challenge faced in the United States at the end of 2012 when temporary tax cuts were due to expire at the same time as government spending was scheduled to be cut.
Brosens said even though the fiscal cliff had been avoided when an agreement was reached on taxes, public spending still needed to be tackled.
“Beyond the fiscal cliff, the US economy is looking healthier. A strong second half of the year still beckons – though the first two quarters could be rocky,” he said. “The problem of the debt ceiling remains as well, and has a March deadline to avoid a messy government shutdown.”
Brosens said the Eurozone started the year relatively well and an European Central Bank rate cut appeared to be off the table “for now”.
“But the situation in southern Europe remains very fragile, and we still think the chance is slightly more than 50% that Spain will have to apply for more European assistance this year.”