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U.S. growth to rise next year, but remains sluggish in 2013: economists

By Matthew Rusling (Xinhua)

13:43, February 26, 2013

WASHINGTON, Feb. 25 (Xinhua) -- The U.S. gross domestic product (GDP) will grow in 2014 but remain in the doldrums this year amid uncertainty in Washington over the debt ceiling and sequester drama, according to a National Association of Business Economists (NABE) survey released Monday.

"NABE panelists expect real GDP to grow by 2.4 percent from the fourth quarter of 2012 to the fourth quarter of 2013 and to grow by 3 percent for 2014," said Dr. Nayantara Hensel, chair of the NABE Outlook Survey Committee and professor of industry and business at National Defense University.

Indeed, more than 95 percent of the panelists forecast stunted growth this year "given the uncertainty surrounding the U.S. fiscal imbalances -- the issues linked to the continuing resolution, sequestration, and the debt ceiling," the report said.

More than half the panelists expected less than a half-point drop in GDP growth, nearly a third of panelists believe the slide will be between half a percentage point and one percentage point, and around 13 percent foresee more than a point.

Panelists forecast that real government consumption expenditures and gross investment will decline by 1 percent this year -- a steeper fall than the -0.6 percent that the panelists had estimated in the December 2012 survey.

But on the bright side, panelists foresee a "gradual acceleration" in the annual GDP growth rate, from 2 percent in the first quarter of 2013 to 3 percent by the fourth quarter. The figure will then stabilize at between 2.8 percent and 3.1 percent between the first quarter of 2014 and fourth quarter of 2014.

Another positive note is private sector jobless rates, which panelists forecast will fall to 7 percent in next year's fourth quarter after averaging 7.7 percent this year, a drop from average the 8.1 percent last year.

Meanwhile, panelists said debt-plagued European nations will likely need bailout packages. More than one-third of the panelists believe that Spain will require a larger bailout next year than was previously anticipated, almost a quarter of the panelists believed that Italy will require a bailout package in 2013, while about a fifth believed Ireland will require a second bailout package in 2013.

Only 14 percent of the panelists said Greece may break away from the euro currency in 2013.

Around half the panelists believed that although debt-burdened Greece will fail to meet its budget and policy targets, the country will continue to provide financial assistance and relax its targets such that debt payments will be made.

Twenty-eight percent of the panelists believed Greece will meet its budget and policy targets and that financial assistance will continue and Greece will make scheduled payments on its sovereign debt.

About 17 percent of the panelists suggested Greece may fail to meet its budget and policy targets, or make scheduled payments on its sovereign debt, and that additional financial assistance will not be forthcoming.

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