Jeremy Cook, chief economist at the currency company, World First, gives City A.M. his timetable for what to expect for the rest of 2013 and ahead:
Political tribulations in the Eurozone always seem to kick-off in the summer months, and the developments from Portugal and Greece give us no reason to suspect this year will be any different. However, this time around the economic situation is a lot different in many ways, with green shoots in the US already being seen to be strong enough for a reduction in monetary stimulus, while China wobbles uneasily in the East.
My timeline for the summer is that we see political issues in the Eurozone drag markets lower as increased fears over the future of the viability of the Eurozone increase should these pro-austerity governments tumble. Haven currencies such as USD, JPY, CHF and GBP increase whilst the euro and emerging market currencies and bonds slip.
The lag on these developments hurting growth is unclear but Eurozone issues have been hemlock for confidence globally in the past and combined with a lower flight path from Chinese growth lead me to believe that Q3 will see growth indicators moderate substantially as aggregate demand takes another hit.
The world’s central banks will be called upon once again to help out their respective economies with the Bank of England increasing QE towards £500bn and chatter around Fed tapering being suspended until at least early 2014.