Hi °C | Lo °C Emerging markets like Brazil, Russia, India and China will drive global growth next year, according to a new report from Danske Bank.
The bank's Global Scenarios document today forecasts global growth of 3.8% in 2013 from 3.3% in 2012 and the first simultaneous recovery in the world since 2009.
Angela McGowan, the bank's UK chief economist, said improvement is expected in all regions, particularly emerging markets which drive around 75% of global growth.
"Following a very weak global economy in 2012, we believe there is reason for more optimism about 2013," she said.
"This optimism stems from three main areas. In the first instance, the very high stress levels stemming from the euro crisis in 2012 have come down again, as European policy now makes it easier to fight future escalations of uncertainty.
"In addition, the recent signs of recovery in China and further expected improvements in the coming months will also lift sentiment.
"Finally, we believe that uncertainty around the US fiscal cliff will only last through to year-end and on the other side of New Year, US companies will be confident about investing again."
The report says that the euro area is expected to leave recession, but growth is nevertheless forecast to remain weak at just 0.3%.
However, recovery in emerging markets will positively influence European exports. The timing of the European recovery next year is uncertain, but it is significant that the pace of fiscal tightening will slow because we are now past the harshest belt tightening.
"Fiscal tightening in Europe is set to continue but at a much slower pace next year," said Ms McGowan.
"In 2011, it amounted to 1.9% of GDP in the euro area, then 1.3% this year and in 2013, it will be adjusted down to 1%."
When it comes to the world's largest economy, economic growth in the US will be bumpy in the short-term as politicians negotiate a solution to the fiscal cliff but the report said that falling unemployment will boost confidence levels.
Ms McGowan added: "Widespread uncertainty and disappointing growth in 2012 have kept companies in cost-cutting mode.
"Investment spending has been held back and suffered a further setback over the summer months.
"Higher earnings have mostly been saved, leaving companies across the globe with quite high cash buffers.
"Companies are also lean as reducing costs to raise earnings has been a strategy for some time.
"If uncertainty fades as expected, there is potential for unleashing at least some of the pent-up demand that has still not come through.
"Companies may be cautious for some time, but a gradual recovery from current depressed investment levels seems likely in 2013."
