Global economy expected to avoid recession

The world is looking to be a slightly more benign place compared to a few months ago. Despite a mild contraction in Europe, the global economy is expected to avoid recession, driven by growth in emerging Asia and the United States. In fact, financial market sentiment has improved significantly since the beginning of 2012. This reflects the combination of a steady, albeit unspectacular recovery in the US and the massive European Central Bank intervention which helped to dispel fears related to the euro debt crisis. Meanwhile, fears of a hard landing in China have so far not materialised. This scenario has also prompted various analysts to revise upward their global growth forecasts. Going forward, these three main themes will continue to shape the fortune of the world economy and the prospects for financial markets. However, political uncertainty relating to the elections in Greece and France, a prolonged period of elevated commodity prices, in particular oil, and serious signs of liquidity fatigue, would most likely cast serious doubts on the outlook. Macroeconomic Outlook Europe continues to pursue efforts aimed at stemming the sovereign crisis, thereby reducing the systemic...