| In 2010, according to a report issued by Bank of America's (BofA) Merrill Lynch Global Research, the world economy will witness a gradual, yet significant economic recovery next year.
The Macro Year Ahead for 2010, released on December 14, projected higher-than-consensus Gross Domestic Products (GDP) growth, low inflation, and a bullish outlook for equities. It also sees a window for a strengthening U.S. dollar against select currencies, with a less attractive outlook for government and corporate bonds.
"We believe the global economy will gather momentum in 2010," said Ethan Harris, head of North America economics and coordinator of global economics at BofA Merrill Lynch Global Research.
The BofA Merrill Lynch Global Economics Research team forecasts global GDP growth to be 4.4 percent in 2010 – well above the 3.1 percent predicted by the International Monetary Fund (IMF). The team projects growth will be led by China, at 10.1 percent, while projecting U.S. GDP growth at 3.2 percent.
Francisco Blanch, head of commodities strategy, expects commodities will be driven by strong demand in emerging markets. "Crude oil could break $100 per barrel by late 2010 and … gold top $1,500 per ounce in the next 18 months," Blanch said, "particularly if the dollar weakens further against emerging market currencies."
David Bianco, head of U.S. equity strategy, expects the S&P 500 to appreciate about 15 percent from "global cyclical" sectors of technology, energy, industrials and materials. "These four (economic) sectors have high direct foreign sales, and benefit from high commodity prices and U.S. exports," said Bianco.
"Despite reassuring market strength, 2009 ultimately played out as a year of contradictions," said Michael Hartnett, chief global equity strategist and chairman of the Merrill Lynch Research Investment Committee.
"The coming months," he added, "will reveal whether investors can move forward with confidence or whether a policy misstep will interrupt (a) slow and steady recovery."
(Reporting from New York)
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