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All of these factors will translate into modest investment returns, according to BofA Merrill Lynch Global Research’s 2012 Year Ahead Outlook. Europe took center stage for the 2012 analysis. BofA Merrill Lynch Global Research’s macro analysts forecast global economic growth of approximately 3.5% during 2012. The team anticipates credit and commodities will outperform equities in the first half of 2012, and recommends investors overweight corporate and emerging market bonds. “The global economy can weather a normal size recession in Europe, in our opinion,” said Ethan Harris, co-head of Global Economics Research. “The U.S. faces its own challenges, with gradual fiscal tightening and considerable uncertainty around policy after the election. As a result, while we expect solid 3% GDP growth in the current quarter, we look for growth to slow to just 1% by the end of 2012.”At a press briefing in New York, Harris addressed the severity of the situation for Greece. He said the European Central Bank (ECB) is “asking for too much austerity,” adding Greece “needs to be on a sustainable path to reduce its debt and create growth. We need to focus more on reform and not just austerity. The people of Greece may think things can’t get worse, when they really can.” If Greece were to exit the Euro-zone, the problem wouldn’t be so much in the exit itself, but in the collateral damage, Harris noted. The exit would also have to be a controlled one, not chaotic; if there is a chaotic exit from the Euro-zone, it would “create many shocks in the markets. It’s easy to get married and hard to get divorced – and they have 17 kids to think about,” he concluded
Europe took center stage for the 2012 analysis. BofA Merrill Lynch Global Research’s macro analysts forecast global economic growth of approximately 3.5% during 2012. The team anticipates credit and commodities will outperform equities in the first half of 2012, and recommends investors overweight corporate and emerging market bonds.
“The global economy can weather a normal size recession in Europe, in our opinion,” said Ethan Harris, co-head of Global Economics Research. “The U.S. faces its own challenges, with gradual fiscal tightening and considerable uncertainty around policy after the election. As a result, while we expect solid 3% GDP growth in the current quarter, we look for growth to slow to just 1% by the end of 2012.”
At a press briefing in New York, Harris addressed the severity of the situation for Greece. He said the European Central Bank (ECB) is “asking for too much austerity,” adding Greece “needs to be on a sustainable path to reduce its debt and create growth. We need to focus more on reform and not just austerity. The people of Greece may think things can’t get worse, when they really can.”
If Greece were to exit the Euro-zone, the problem wouldn’t be so much in the exit itself, but in the collateral damage, Harris noted. The exit would also have to be a controlled one, not chaotic; if there is a chaotic exit from the Euro-zone, it would “create many shocks in the markets. It’s easy to get married and hard to get divorced – and they have 17 kids to think about,” he concluded
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