PIMCO | – New Normal … Morphing

An Interesting view from PIMCO’s El-Erian re the next 3-5 yrs global outlook…

I suspect that many of you are also interested in our big macro calls. So, put all this together in PIMCO’s medium-term analytical blender and this is what you get for the next three to five years:

1 In Europe, with the lack of a comprehensive resolution, the collapse of the single currency will remain conceivable though not a dominant probability. The more immediate threat is a process of “zombification” with the balance of risk tilted to the downside, coupled with additional debt restructurings some of which may not be decisive enough to lift growth-inhibiting debt overhangs.

2 The U.S. will continue to heal but maintain a cruising-growth speed that is not much greater than 2% on average, with concerns over subpar growth relative to potential broadening to encompass worries about the level and composition of potential.

3 Japan will have an initial growth surge but its sustainability will be challenged by challenging structural reforms and an increasingly less accommodating regional and global context.

4 China will maintain average growth in the 6%-7.5% range, underpinned by gradual economic rebalancing and continued efforts to manage risks in the financial system.

via PIMCO | – New Normal … Morphing.