Share prices have risen around the world, with global indexes up by about 20 per cent from the lows in June last year. Borrowing conditions in capital markets for creditworthy borrowers internationally remain extraordinarily favourable. For investors, conversely, returns on “low risk” assets are very low and the “search for yield” has intensified.
World GDP growth is thought to have been about 3¼ per cent in 2012 – a little below average. Forecasts for 2013 are for something a bit higher than that, with a further pick-up in 2014. Those seem reasonable guesses at this point in time. Risks now seem less tilted to the downside than they were.