1. Page 1 of 2
Economic Commentary
QNB Economics
economics@qnb.com.qa
April 12, 2014
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China
Sub-Saharan Africa
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EmergingMarkets
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Euro Area
The World Economy On a Bumpy Road to Recovery
The world economy continues to move slowly
out of the recovery room from the great
recession of 2008-09, with still a number of
bumps and bruises. This is the main message
coming out of the IMF and World Bank Spring
Meetings in Washington DC this weekend.
While US economic growth remains moderate,
the Eurozone is suffering from a tepid recovery
and near deflation. At the same time, Chinese
growth is slowing on lower export demand and
excessive leveraging and Emerging Markets
(EMs) continue to adjust to the negative
repercussions of the tapering of Quantitative
Easing (QE). Overall, the global growth picture
remains mixed, with only the GCC
(particularly Qatar) and Sub-Saharan Africa
registering strong growth and a positive
outlook.
Latest QNB Group Growth Forecasts
(Real GDP growth rates, % change)
Sources: IMF estimates and QNB Group forecasts
The US economy witnessed a slow start in the
first quarter of 2014. Unusually cold weather
has impacted construction activity and
housing, while manufacturing and consumer
sentiment remained moderately strong. A
large trade deficit is also likely to dent
economic growth. Looking ahead, the full
implementation of QE tapering in the second
half of 2014 is likely to keep growth moderate.
Overall, QNB Group expects US economic
growth of 1.5%-2.0% in 2014-15.
The Eurozone crisis seems to be finally over
but challenges remain. On the positive side,
the Eurozone periphery (Greece, Ireland,
Portugal and Spain) is clearly showing a strong
recovery, which is leading to lower bond
spreads and higher equity prices. On the
negative side, the Ukraine crisis and very low
inflation (0.5% in March 2014, the lowest since
November 2009) could derail the fragile
recovery. Without additional monetary easing
by the European Central Bank, growth is likely
to remain below 1% in 2014, potentially rising
to 1.0-1.5% in 2015.
China has so far accounted for more than half
of global growth since 2009. However, its
growth momentum probably slowed in the
first quarter of 2014 on lower export demand
and excessive leveraging. As a result of an
unusual slowdown in global trade, Chinese
manufacturing virtually halted in February
2014. At the same time, concerns about
excessive lending practices and shadow
banking have made credit harder to get. The
Chinese authorities have responded to this
slowdown by announcing an accelerated
public investment program, which should help
maintain the growth momentum in the range
of 7%-7.5% in 2014 and 7.5%-8.0% in 2015.
EMs are suffering from a significant economic
slowdown brought about by the negative
repercussions of QE tapering. In order to limit
capital outflows and restore investor

2. Page 2 of 2
Economic Commentary
QNB Economics
economics@qnb.com.qa
April 12, 2014
confidence, most EMs have had to tighten
macroeconomic policies. As a result, growth
has significantly weakened in countries like
Brazil, India, Russia, South Africa, Thailand,
Turkey and, to a lesser extent, Indonesia. This
is likely to continue as QE tapering is fully
implemented and long-term interest rates in
advanced economies start rising. EM growth
will therefore slow to an average 4.0%-4.5% in
2014 and 3.5%-4.0% in 2015.
Against this global trend, growth in the GCC
region continues to strengthen. A strong push
for diversification through strong
infrastructure spending is pushing up non-
hydrocarbon growth. Qatar is leading the
region with projected double digit growth in
the non-hydrocarbon sector, leading to 6.8%
overall growth in 2014 and 7.8% in 2015.
Overall, growth in the GCC region is expected
to average 4.5%-5.0% in 2014 and 5.0%-5.5%
in 2015.
Last but not least, Sub-Saharan Africa
continues to be the fastest growing region.
Following the much anticipated rebasing of its
GDP, Nigeria has become the biggest economy
in the subcontinent (26th
largest in the world)
at USD509bn in 2013. It is expected to grow
nearly 8% in 2014 and 7% in 2015 on a strong
diversification drive. Large investment
spending is also boosting growth in countries
like Ghana, Mozambique and Tanzania.
On the other hand, conflict in Central African
Republic, South Sudan, and the Democratic
Republic of Congo is hampering economic
development. Overall, the subcontinent is
expected to grow by 6.5% in 2014 and 7.0% in
2015.
Overall, the global growth picture continues to
be mixed. While advanced economies are
slowly recovering from the global recession,
their recovery looks fragile and still bumpy.
China’s growth momentum is slowing, but the
authorities have already taken measures to
address the slowdown. EM growth is likely to
weaken further in 2014 on tighter
macroeconomic policies and the negative
impact of further QE tapering. The only bright
spots remain the GCC and Sub-Saharan Africa.
Hopefully, no further bumps will derail the
weak global recovery.
Contacts
Joannes Mongardini
Head of Economics
Tel. (+974) 4453-4412
Rory Fyfe
Senior Economist
Tel. (+974) 4453-4643
Ehsan Khoman
Economist
Tel. (+974) 4453-4423
Hamda Al-Thani
Economist
Tel. (+974) 4453-4646
Ziad Daoud
Economist
Tel. (+974) 4453-4642
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