Crystal ball

ING IM predicts year of growth despite headwinds from austerity and clear risks of ‘shocks’

ING Investment Management is predicting 2013 will see growth despite a significant risk of market shocks. 

However, it says upside risks are clearly visible, but investors may miss out on this due to low confidence levels.
 
New research from the investment manager conducted with European institutional investors reveals that 85 per cent have major concerns about a Eurozone collapse, with the second biggest threat being seen as a slowdown in China – something 40 per cent of respondents are very concerned about.
 
At its Annual Outlook Conference held in London on 13 November 2012, the investment manager predicted World Real GDP growth of 3.3 per cent for 2013, compared to its estimate of three per cent for 2012. It anticipates growth of 2.2 per cent in the US this year, but this will fall slightly to two per cent next year. Its estimate for the Eurozone and UK are -0.5 per cent and 0.3 per cent, and -0.1 per cent and 1.3 per cent respectively.
 
When considering emerging markets, ING IM anticipates GDP growth of 5.4 per cent this year, which will rise to six per cent in 2013. For China, it estimates that the corresponding figures will be 7.6 per cent to 7.8 per cent, but this will slip to 6.5 per cent in 2014.  
 
Valentijn van Nieuwenhuijzen, head of strategy, ING Investment Management, says: “Forecasts for 2013 should be seen as a ‘tug of war’ between the positive dynamics of monetary easing adopted by authorities, and the drags exerted by fiscal tightening and private sector deleveraging. The world is still very volatile, and imbalances make the economy very susceptible to shocks. But there will always be new shocks, and investors must remember to ride the cyclical waves.
 
“Investor confidence is low, so many may miss out on the upside risks that we believe are clearly visible. House price data the US is improving, and the building sector there is becoming more positive in its outlook. However, there is also confusing data such as the dichotomy in the US labour market, which is holding up, and declining capital expenditure.   This could be a sign of corporate retrenchment or of rational expansion - Capex is less easy to reverse than a hiring decision.”

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