The global economy continues to tread water as many major developed nations are either growing at a very slow rate or, in Europe and Japan's case, are experiencing a slowdown. Monetary policies seem to be having a limited effect in many cases, while prolonged high levels of unemployment remains a prime concern in both the United States and eurozone economies.
U.S. Uncertainty Remains Despite Election
The U.S. economy remains relatively uncertain, despite the end of the presidential election season. After winning a second term in office, President Barack Obama faces ongoing opposition from House Republicans that could push the economy towards a so-called "fiscal cliff." However, a resolution is still widely expected before automatic austerity measures go into effect.
Meanwhile, the economic environment in the U.S. continues to be bearish after a slight recovery in November, as jobless claims edged up towards the end of last month as Hurricane Sandy's impact was seen in U.S. factories. Economists now expect the country to grow at just a 1.6% annualized rate during the fourth quarter, according to a Reuters poll.
Eurozone Remains Mired in Bureaucracy
The eurozone may have thwarted a sudden crisis earlier this year, when the European Central Bank (ECB) announced its unlimited bond buying program. But, the region could still face death from a thousand cuts, as its leaders remain paralyzed by inaction and the inability to come up with a comprehensive solution to the sovereign debt crisis.
The lack of agreement on Greece's next tranche of aid has led to immense uncertainty, while Spain's refusal to accept an ECB bailout has alarmed some investors. At the same time, the eurozone is facing record unemployment of over 11.6% in September and larger economies like Spain's continues to contract with little signs of reprieve.
Asia's Fortunes Grow More Divided
Asian economies have long been divided between those that are rapidly growing and those that are slipping into tougher times. Japan has been a great example of the latter scenario, as it sank into a recession during the third quarter, prompting the Bank of Japan (BOJ) to continue its "powerful monetary easing" to promote growth. But, many economies believe this may not be enough.
On the flip side of the coin, China's fortunes seem to have changed for the better, after the country reported that its seven straight quarters of slowing growth have ended. Meanwhile, central Asian countries like Kazakhstan and Uzbekistan are projected to see 5.5% GDP growth, as their economies are buffered by oil and commodity exposure.
Britain Remains a Mixed Bag
Britain's economy lacks the momentum that many investors would like to see, but remains on a relatively stable recovery path, according to the OECD. The group's composite leading indicators (CLIs) that have a solid track record of predicting changes in economic conditions continues to point towards a slow pick-up in growth throughout the United Kingdom.
However, there has been speculation that the lackluster growth rates could spur another round of quantitative easing by the Bank of England (BOE), while interest rates remain at a record low 0.5%. Since January 2008, the central bank has purchased nearly $600 billion worth of Gilts (U.K. government bonds) to re-inflate the troubled economy.
Forex Outlook For December 2012: Upcoming Events To Watch
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