SC: Global Economic Growth To Improve, Emerging Economies Remain Key Drivers

KUALA LUMPUR, March 6 (Bernama) -- The global economic growth is expected to improve this year with emerging economies, led by China, remain key drivers to the development, supported by stronger recovery momentum in advanced economies. Securities Commission Malaysia (SC), in its 2014 annual report, said the US, the world's largest economy, would likely grow by more than three per cent on the back of strong growth in private consumption and softening of the fiscal drag. However, a recovery in the Eurozone economy would stay fragile with inflation expectations declining and well below the European Central Bank's target of two per cent. In Asia, the economic growth of its biggest economy, China, is expected to remain robust in spite of a managed slowdown as it implements measures to contain the build-up of financial vulnerabilities and address excess capacity in certain sectors of the economy. For Japan, SC said the country would record a relatively higher growth this year from two per cent in 2014. The softening oil prices would support the recovery while the implementation of necessary structural reforms remain as challenges for Japan. "There may be some differences in attractiveness of emerging markets based on the impact of lower commodity prices, but ultimately fundamentals will dictate long-term performance," the statutory body said. Following the mixed growth, SC said such currency predicated monetary policy adjustments might continue to feature during the year. In addition, it said investors sentiment and market volatility would likely continue to be affected by trends at the end of 2014, namely severe declines in oil prices and the appreciation of the US dollar. For emerging economies, SC expected further rounds of volatility would occur in both asset and currency markets. However, the maintenance of monetary policies should help sustain global liquidity and offset the impact on capital markets from the immanent US rate hike, SC said. In 2014, the global capital market was worsened by increased investor risk aversion in the beginning of the year due to concerns over the outlook of US and China economic conditions. It deteriorated in the second half of 2014 due to growing political tensions in Ukraine and the Middle East, downward revision of global growth outlook by the International Monetary Fund, and plunging oil prices, among others. The best performing bourse index last year was the Argentina's Merval Index, which logged an annual gain of 58.9 per cent, while Russia's Moscow Interbank Currency Exchange and Brazil's stock market were among the worst. Global initial public offering grew 51.9 per cent last year, rising US$263.3 billion, the highest since 2010. -- BERNAMA