Economic Outlook

Regional Analysis (December 30th, 2013)

USA

Janet Yellen, incoming Federal Reserve Chairman, fully supports the expected termination of asset purchases by
late 2014. Several members of the FOMC expect unemployment to fall below 6 .5% by the end of 2014, but will
maintain interest rates at near zero whilst inflation remains below 2%. The economy has been expanding at a
moderate pace and is expected to pick up further.

Eurozone

The ECB expect a prolonged period of low inflation allowing them to leave interest rates at present or lower levels
for an extended period of time. It is ready and able to act with forward guidance, any further funding will be targeted
at the economy and not the banking system.
Low fertility rates and high bureaucracy continue to act as a headwind.

Japan

The Bank of Japan sees a continued moderate recovery and inflation rising gradually to the target of 2%, enabled
by purchasing Government and corporate bonds, exchange traded funds and real estate trusts.
Housing investment
and industrial production have increased.
Immigration controls need to be drastically relaxed to aid growth so taxes
can reduce Government borrowing. Publicised structural reform awaits.

China

The Peoples Bank of China saw an improved economy, whist leverage and excess capacity, real estate and local
government obligations remain problematic. They noted that a basis for stable consumer prices has not yet
consolidated. Credit resources are guided towards agriculture, rural areas, farmers and micro and small
enterprises.

UK

The Bank of England saw a burgeoning recovery, counterbalanced by softness in consumer data and appreciating
sterling
. Interest rate increases will be considered when unemployment falls below 7% and inflation is above 2
1/2%.
Inflation in expect to decrease to 2% in the first quarter of 2014.

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