Tags: Goldman | growth | GDP | stock

Goldman Sachs Analysts Predict Stronger Global GDP, Stock Markets

Friday, 04 Apr 2014 09:02 AM

By Dan Weil

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While economies and stock markets around the world showed sluggishness in the first quarter, analysts at Goldman Sachs expect better times ahead.

"We think that the next couple of months are likely to be dominated by evidence that the growth weakness of the first quarter is giving way to the kind of recovery profile that we expected initially coming into the year," the analysts, led by chief markets economist Dominic Wilson, wrote in a commentary obtained by CNBC.

"Our forecasts imply an acceleration in global GDP growth, excluding Japan. The U.S. economy is set to bounce back from the drags from weather and destocking. And China's weak start to the year should give way to something a little better, as modest stimulus falls into place."

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China announced Wednesday that it will cut taxes for small businesses and increase railway construction.

U.S. economic data have been mixed so far this year, with the jobs market remaining weak. Goldman analysts forecast modest U.S. growth of 1.5 percent for the first quarter, but see an acceleration to 3 percent in the second quarter.

That backdrop and the easiest U.S. financial conditions since the financial crisis should boost U.S. stocks and bond yields, the Goldman analysts noted.

"We think the reality of a better cyclical picture has not yet been fully priced," Wilson said in the research note.

Other market participants share Goldman's enthusiasm toward U.S. stocks and the economy.

"Domestic markets are attractive," Tom Stringfellow, chief investment officer at Frost Investment Advisors, told The Wall Street Journal. "The tenor hasn't changed, and more and more people are buying into the idea that the economy is grinding up that hill."

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