PIMCO Cyclical Outlook: At Policy Crossroads
Key Points:
· The global economy is in the midst of a cyclical slowdown driven by both economics and politics.
· The maturation of the global cyclical growth phase suggests we look to a handoff to more secular drivers of growth. But strong secular drivers remain elusive due to the continuation of New Normal headwinds.
· Policies are at important crossroads in every major economy. Developed countries are struggling to find the right fiscal and monetary policy mix between cyclical stimulus and secular normality, while developing economies’ export-led models face a multitude of pressures.
· 2013 will be the year of policy change, with policymakers in major economies challenged to enact structural changes that spur private sector growth before government-balance-sheet-led growth is exhausted.
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