Geopolitical risks brought on by the confrontation between Ukraine and Russia are unlikely to slow global GDP growth in 2014.
Standish Mellon Asset Management Company’s Global Macro Views report continues to forecast global GDP growth of 3.5% in 2014 and 3.7% 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,” says 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.”
The report notes that the confrontation with Ukraine could spark investor concern that Russia’s economic growth could be threatened by economic sanctions.
Looking at various regions, Standish continues to see 2.7% for the U.S. in 2014. For the eurozone, it forecasts growth of 1.2% for 2014.
For the United Kingdom, Standish is forecasting GDP growth of 2.6% 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,” adds Higgins.
In other regions, Standish is looking for GDP growth in 2014 of 7.2% in China, 1.5% in Japan, 3.2% in Latin America and 2.6% in eastern Europe. For Russia, Standish is forecasting GDP growth of 2.2% in 2014.