The euro-zone crisis is taking its toll on the rest of the world. Activity slowed in all major economies in the second quarter, including the US, China and Japan. We expect growth to pick up in the US and China in the second half of the year, but Japan’s recovery is petering out and the euro-zone has entered a deep recession. Lower commodity prices and inflation will make space for further monetary stimulus. However, this may have little impact and is likely to be overwhelmed next year if, as we expect, the euro breaks apart. Overall, we expect global growth of only around 3% this year and next, followed by a modest pick-up in 2014 as the worst of the crisis passes.
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