Investments  

Steady as she goes for global economy

This article is part of
Mid-Year Review - July 2014

In contrast, the situation in the UK is much more positive, as confidence and activity have increased sharply since the middle of 2013. Unemployment has fallen, and the housing market has strengthened, particularly in London, increasing speculation that the Bank of England may increase interest rates sooner rather than later.

There are some doubts as to whether an early rate rise is appropriate, given the risk it could dent confidence and hinder growth. In addition, inflation remains relatively low and there is also some political uncertainty over the next few months, with the Scottish referendum scheduled for September and a general election in May 2015.

Five years into this recovery it is clear progress is being made, but the pace of growth in the global economy is still moderate. Each economy is facing its own particular problems, and heightened geopolitical challenges increase the risk of a higher oil price.

Taking all of this into account, global economic growth is expected to remain at a satisfactory but moderate level until the end of the year.

Shona Dobbie is head of the Economic Research Centre at Alliance Trust