Heightened Volatility Possible
Geopolitical risks brought on by the confrontation between Ukraine and Russia are unlikely to slow global gross domestic product (GDP) growth in 2014, according to the March Global Macro Views from Standish Mellon Asset Management Company LLC, the Boston-based fixed income specialist for BNY Mellon.
Standish continues to forecast global GDP growth of 3.5 percent in 2014 and 3.7 percent in 2015.
"Ukraine is only a $175 billion economy* in nominal GDP and is not likely to have much impact on the $73 trillion global economy," said Thomas Higgins, chief economist for Standish and a co-author of the report. "Our base case is that the crisis in the region will not intensify, though it could continue to be a source of volatility in global financial markets."
Looking at various regions, Standish continues to see 2.7 percent growth for the U.S. in 2014. For the euro zone, Standish forecasts growth of 1.2 percent for 2014, slightly above the consensus of one percent.
For the United Kingdom, Standish is forecasting GDP growth of 2.6 percent in 2014. "The U.K. growth story remains strong, as increases in business investment such as buildings and machinery came in particularly strong in the fourth quarter of 2013," Higgins said.
In other regions, Standish is looking for GDP growth in 2014 of 7.2 percent in China, 1.5 percent in Japan, 3.2 percent in Latin America, and 2.6 percent in eastern Europe. For Russia, Standish is forecasting GDP growth of 2.2 percent in 2014. The report notes that the confrontation with Ukraine could spark investor concern that Russia's economic growth could be threatened by economic sanctions.
