Leading economist predicts brighter prospects for 2013
Tuesday 18th December 2012, 11:00AM GMT.
THE world economy remains ‘on a knife edge’ but a leading economist is anticipating brighter prospects in 2013.
‘The global environment is weak and vulnerable,’ said Han de Jong, chief economist at ABN Amro, ‘but I do think there are also quite a few positives to take into account.’
Mr de Jong, pictured, pointed to action by the European Central Bank which had reduced very negative tail-end risk, and said that the eurozone crisis had eased a little, and prospects would be improved if it were kept under control.
‘Fiscal consolidation in Europe isn’t getting any worse,’ he added. ‘That is a weak argument but very important – that gives the economy more breathing space.’
He also expected the United States’ fiscal cliff would be avoided and that growth in emerging markets would re-accelerate.
He told a presentation to the local branch of the Chartered Institute of Securities and Investments that investor attitudes could also change in 2013.
‘This is going to be an environment where investors are gradually finding the courage to sell some hardly-yielding assets and buy something that promises a little bit more return. Risky assets will do relatively well.’
At the same time last year, a presentation from Mr de Jong was dominated by Greece. This time the euro was mentioned, but Greece was largely absent from discussions.
Mr de Jong said that politicians needed to find medium and long-term solutions, including creating sustainable public finances, convincing budget rules for all, banking union and structural reform to boost growth dynamics.
‘I am encouraged that Greece is getting time to sort itself out,’ he said. ‘Spain is missing budget targets but there are no demands for more austerity. I think the right measures are being taken and the approach makes a lot of sense.
‘These countries need to continue the process of structural reform – push too hard and that causes a lot of pain which is not going to be too helpful.’
Mr de Jong added that the UK was in a different position. ‘Some may say the UK is doing too much austerity, but if you are a financial centre and it is a very important part of your economy, it is important to have fairly sound public finances. So there is a case for a relatively large dose of austerity in the UK – probably bigger than in many European countries.’
Han de Jong, chief economist at ABN Amro, gives sixth-form students an insight into finance and the economy.
CampaignsVoice For Victims
Voice for Victims is a campaign aimed at promoting the rights of those affected by child sexual abuse.