“Necessary governmental austerity measures all over the world will prevent the economy from returning to a boom phase in 2013”, foresees Fritz Mostböck, head of Research at Erste Group. A continued conflict in the Middle East would burden the financial markets at least temporarily and oil and commodity prices particularly in the long run. In US, Fed’s purchases should improve consumer confidence and support the consumption in 2013. This would overall lead to an unchanged growth rate at 2% for 2013 and a gradual acceleration in 2014, providing a much-needed lift to global growth, in particular to exports in the Eurozone. European Central Bank measures improved sentiment on financial markets, which - looking at the underlying fundamental development (low growth) - should be a question of time until financial markets and real economy clash back. “After Croatia’s EU entry in July, we see up to 2.5% of GDP growth in 2014-2020 due to access to common market and to EU funds. The EU integration of the Balkans is expected to receive another boost during 2013 when Serbia is expected to get the kick-off date for negotiation”, underlines Mostböck.
“Global equity markets will perform well next year”, states Mostböck. Attractive valuations and the lack of alternatives should lead to positive returns in most stock market indices. European Corporate Credit should remain in investors’ focus, especially corporates with high geographic diversification and a broader client base who will record better cash flow generation. The limited investments for expansion and M&A could result in much stronger interest for new issues and tightening spreads, particularly by corporates in core regions. “In our view, investors should avoid investments in European telecom- and the utility sector as their weak performance will last also in 2013 and afterwards”, emphasizes Mostböck. “We see CEE car producers as an appealing investment. Every fourth car produced in the EU in 2013 will be "Made in CEE" as the former Czechoslovakia - with 2 million passenger cars estimated in 2012 - is now the second largest car producer in Europe right after Germany. CEE car production is continuously gaining share on expense of car producers from Southern Europe benefiting from competitive labor costs and strong presence of German (VW, Skoda) and Asian manufacturers (Kia, Hyundai, Toyota).”
The global debt situation will remain a dominant topic. It will be very difficult to cut the high level of total debt and of budget deficits; and that does not only apply to the Eurozone. The debt crisis in the large industrialised nations (Eurozone, USA, Japan, UK) will be challenging us for years to come. The economic environment will therefore remain fragile. The previous financial, economic, and confidence crisis is firmly lodged in the debt, the reduction of which will be difficult and time-consuming. This will put the financial markets and the real economy repeatedly to the test in the coming months.