The growth rate in the world economy is accelerating, but activity is still divergent and anaemic, according to Skandinaviska Enskilda Banken AB (SEB).
Gross domestic product (GDP) in the 34 countries of the Organisation for Economic Cooperation and Development (OECD) will grow by 1.3 per cent in 2013 and 2.3 per cent in 2014.
"Our scenario of low international price pressures remains in place; if anything, inflation has provided downside surprises because of low resource utilisation and downward pressure on wages and salaries as well as on commodity prices," notes the SEB in its Nordic Outlook.
The SEB notes that although official economic policies enjoy market confidence - as reflected, among other things, by low bond yields and rising stock markets - changes in fiscal and monetary policy are also creating uncertainty.
Factors on the plus side for global growth are cyclical forces and monetary policy. Capital spending and inventory levels are depressed.
In the United States, which is playing a key role in the economic recovery, household consumption is buoyed by rising home prices and share prices as well as by the near-completion of the debt deleveraging process.
Emerging economies will accelerate cautiously, although several of these countries have suffered recent setbacks. Various central bank actions are ensuring low interest rates and an unlimited supply of liquidity, while fiscal austerity policies are being softened.
On the minus side is the euro zone, which - despite its progress in correcting imbalances - is still struggling with a dangerous combination of weak growth, undercapitalised banking systems and inadequate credit supply, high government debt and political instability.
"The slowdown in China during the past few months does not change our overall picture of continued solid GDP growth of 7.9 per cent in 2013 and 7.7 per cent in 2014, well above China's critical growth level of 6 per cent," says the SEB. "The leadership change has now been formally completed, but it is too early to say how willing the Xi administration is to implement reforms."
Generally speaking, inflation pressure is low, with core inflation below 2 per cent and producer prices still falling year-on-year. Home prices have begun to accelerate, increasing the pressure for measures to slow credit expansion. During the fourth quarter of 2013, the central bank will hike its key interest rate by 0.25 percentage points to 6.25 per cent.
By the end of 2014, the key rate will be at 6.75 per cent. The yuan will continue to appreciate, but at a somewhat slower pace. At the end of 2014, the USD/CNY exchange rate will be 6.00.
In terms of global economic and financial policies, "Japan is a joker in the pack," says the SEB. The international community and the Japanese themselves have given the green light to "Abenomics", a set of economic policies named for Prime Minister Shinzo Abe.
"During our 2013-2014 forecast period, Japan's expansionary fiscal policies and radical monetary policies will signify a positive injection in the world economy via faster growth and downward pressure on global interest rates," says SEB. "Our risk analysis implies that an upturn in Japanese long-term yields of 150-200 basis points (to 2.5-3 per cent) is manageable both to Japan and the world."
Meanwhile, the euro zone is struggling with serious challenges that are keeping the future of the euro project uncertain.
SEB expects GDP in the currency area to fall by 0.7 per cent in 2013 and grow by 0.7 per cent in 2014.
The German economy is also feeling the effects of euro zone recession, and SEB expects GDP growth of only 0.3 per cent this year and 1.3 per cent in 2014.
The economic performance of France will be even worse, with President François Hollande under pressure to turn around an unfavourable trend.
The US economy will continue its rebound after a temporary slowdown in activity during the next few quarters, due among other things to the automatic "sequester" cutbacks in the public sector.
SEB expects GDP to grow by 2.0 per cent in 2013 and by 3.2 per cent in 2014 without signs of rising inflation pressure. The labour market will improve slowly, but since the ongoing decline in labour market participation will level out, unemployment will not drop to 6.5 per cent - the level at which the Fed is supposed to re-assess its near-zero key interest rate - before the end of 2014.