In the November economic update video for eZonomics, ING Eurozone senior economist Martin van Vliet said the Euro-crisis, United States fiscal cliff and a possible “hard landing” in China were all key concerns for 2013. But the situation in Europe was the most important.
The situation “is still critical”
Van Vliet said the European Central Bank’s (ECB) new bond-buying programme – called the Outright Monetary Transactions or OMT – significantly reduced market fears of a euro-breakup but the situation was “still critical”.
“Employment and growth continue to weaken. This risks creating further social unrest and weaker consumer confidence,” he said. “Looking ahead, Eurozone growth will need to be restored, probably through a combination of more monetary stimulus, a weaker euro, and slower fiscal austerity.”
Growth to flat line?
The latest ING global economics team forecasts have Eurozone gross domestic product (GDP) falling -0.5 for the full year of 2012, dropping further at the start of 2013 but then recovering to end 2013 at 0%. US growth is forecast at 1.8% for 2013 and China at 9%.