Meanwhile, market hopes for US monetary easing and ECB sovereign bond buying have seen equities rise and risk appetites recover. According to Alan Oster, Chief Economist at NAB, “Monetary policy easing in big emerging market economies like China, India and Brazil and the passing of recession in the UK and Euro-zone should see global growth pick-up from 3% this year to 3.4% in 2013.”
After growing rapidly until early 2012, the 3-month trend in emerging market industrial output – a timely measure of the pulse of economic expansion – has virtually planed off since February. The broad- based softening in the pace of economic expansion has seen a fall in inflation in places like China, Indonesia, Brazil and South Korea but it remains high in India. High unemployment and idle productive capacity have kept a lid on inflation in the big advanced economies and it has slowed sharply in the US and UK while Japan hovers on the edge of deflation.