The global economy is still in recovery, but the uncertainty that clouded forecasts a year ago is beginning to lift. Several bright growth prospects are emerging among developed and developing markets, according to Grant Thornton research.
The US, Germany, Japan and the UK promise robust growth in 2014, according to a quarterly Grant Thornton survey that involves about 3,300 executives worldwide.
While large developed economies are recovering, economic growth is slowing in many developing economies, especially since the US Federal Reserve announced plans to cut back on its bond-buying program. Still, business confidence has been on the rebound in India and China, two of the world’s most populous markets, the Grant Thornton survey suggests.
For 2014, the Economist Intelligence Unit forecast 2.4% growth among the 34 members of the Organisation for Economic Co-operation and Development and 5% growth among non-OECD economies. The difference between the two projected growth rates is the smallest since 2009.
“This is an important development: a more stable, balanced global economy is good for business growth prospects,” Ed Nusbaum, Grant Thornton’s global CEO, writes in the report on the firm’s quarterly survey.
Globally, economic growth is expected to rise to 3.6% this year, up from 2.9% in 2013, according to Grant Thornton. In 2015, the global economy is projected to grow by 4%.
Key drivers of the upward trend are economic growth in developing economies, which is projected to slow from 5.1% this year to 4.2% in 2015 but is still faster than in developed economies (2% in 2014 and 2.5% in 2015), and rising business confidence in several large developed economies.
Looking at more detail in particular regions, the Grant Thornton survey also pinpointed the brightest growth prospects for 2014:
G7 advanced economies. Business leaders in the US, Canada, UK, Germany, France, Italy and Japan – the seven developed economies that make up the G7 – grew progressively more confident in 2013. By the end of the year, 36% of businesses in G7 countries expected to increase profits in 2014. North American business leaders were the most bullish with 52% expecting higher profits this year.
Developing Asia. Business leaders in developing Asia were less confident in 2013. Still, 45% of respondents expected to increase their profits in 2014. Led by China, India and Indonesia, developing Asia is projected to see economic growth of 6.5% in 2014 and 6.6% in 2015 – more than any other region.
Eastern Europe. Business leaders in Eastern Europe were just as bullish about 2014 as North American business leaders. Fifty-two per cent expected to increase profits this year. Central and Eastern Europe, the Balkans and the Baltics are expected to benefit from a euro-zone recovery. Economic growth is projected to rise to 2.7% in Central and Eastern Europe (1.1% in 2013), 2.3% in the Balkans (1.8% in 2013) and 3.7% in the Baltics (2.9% in 2013), according to projections by the Economist Intelligence Unit.
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—Sabine Vollmer (firstname.lastname@example.org) is a CGMA Magazine senior editor.