Economic Outlook: Questionable optimism

Fragile optimism clouds the economic environment; with major world economies hinting towards slow and steady growth. However bleak prospects in European economies hinder such aspirations.
The September issue of the Economic Outlook published by Nordea, a financial services group cites that Spain and Italy have been dragged further into the debt crisis over the summer; while the German economy remains stricken over possible bailouts for EU member states.
While growth in China is expected to remain steady around eight percent with mild improvements, the report raised concerns the Oriental Giant may not meet its export growth target of 10 percent.
Economic growth prospects for India are also hindered in the short-term, firstly due to the biggest drought in the countrys history; and secondly by rising fuel costs that may further aggravate inflation in that country. The report highlighted that inflation in India is already above the five percent target chased after by the Reserve Bank of India.
However, Indias long term prospects are positive due to favourable demographics and large pool of available labour.
An accommodating monetary mechanism is affective throughout; nevertheless its effects are stalled by banks refusal to lend to businesses given the dicey economic situation.
Constrained exports are the biggest concern for many countries mainly due to the uncertain current and future state of the European Union. Furthermore worldwide drought and rising fuel prices are strangling growth in many economies.
Nordea projected that international oil prices will remain high through the projected period up till 2014; just as G7 nations called on Opec members to boost oil production to help quell the rising rate of crude.
Demand for oil is expected to increase going into 2013-14, as world economies shake off the slumber or yesteryears and restore confidence.
The metals industry has slowed down in the earlier half of the year since March primarily due to the Euro zone. China, which consumes 40 percent of the worlds industrial metal, is expected to pick up in the latter part of this year as infrastructure projects are fast-tracked to support growth.
On the whole, the demand for metals will be robust in the foreseeable future, leaving supply to continue expanding. However expectations of the market tightening will bring up prices.