Current question in the Economics Forum:
"What is your estimate for economic growth in the most important regions and sectors of the global economy and do you expect inflationary or deflationary trends in Europe next year? Which macroeconomic factors should investors monitor most in 2014?”
"The consensus arguments that the global business cycle will strengthen next year primarily supported by better American and European economies are quite convincing. Fiscal policy will not be as tight and most economies have taken important steps in the right direction since the global crisis hit five years ago. There is one very strong reason why today’s already low inflation will continue to slowly decline. The expected real growth rates are insufficient to close the output gaps until well into the second half of the decade. Everywhere low capacity utilization rates will slowly pull prices towards deflation.
There is one important exception to the reasoning above. Germany’s output gap is the lowest within the Eurozone and will be wiped out in 2015 (according to OECD in November). The German prices may soon be pulled in the other direction. This is the market solution – deflation in the crisis countries and inflation in Germany – in order to keep the Eurozone together."