As is now traditional at this time of year, financial markets are looking forward to some form of global economic recovery unfolding over the next 12 months. Last year, the hypothesised driver for the widely prophesised recovery was expected to be an end to the Euro Crisis – which plainly did not happen – but this year’s catalysts are expected to be a Chinese economic renaissance and the “knock on” effects of the recent revival in the US housing market. Once again, though, global policymakers are much less certain of this benign scenario coming to pass. At the beginning of 2012, we encountered perhaps the widest gap that we had ever uncovered between expectations within financial markets and expectations amongst central bankers and, rather worryingly, this expectations gap does not seem to have closed much with regard to the year ahead. Indeed, many central bankers – including the US’s Mr Bernanke – are still attempting to find new ways to ease their policy regimes and we can only assume that this is because they continue to fear for the global economic outlook.
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