Citi's Global and US Economic Forecasts - what the risks are

In late February,Citigroup issued its global economic outlook.It cut its global expansion forecast from 2.7% to 2.5%.Global prospects are worsening further,with deterioration across advanced economies alongside previous weakness in the emerging markets,Citi's research note said.Britain's upcoming vote on whether to leave the eurozone is a key extra near term global risk that would hurt both the UK and EU economies;while more policy easing from the European Central Bank and Bank of Japan will provide only limited stimulus.*
On 15 April,Citi released its US forecast.Our US outlook has little potential to be surprised on the upside,but the risks are very evident on the downside,said William Lee,head of North American Economics.Risk is from looming uncertainty as to when the Fed will make rate hikes,as well as many important political events here and abroad scheduled in the next few months.Recently reviewed and incoming data imply GDP will grow by 0.9% in Q1 and 1.7% for the year.
Despite such tepid growth prospects,we project a slow decline in the unemployment rate to 4.6% by end-2016,and 4.5% by end-2017.We continue to believe there will be only one rate increase this year-likely in September-unless developments stir financial markets and/or dampen further growth prospects.In that event,December or a later meeting would be a more likely date for an increase,Mr.Lee noted.*
Citigroup (C)

Monday Newsline:Ukraine and Market Risk

Overnight,the Asian markets reflected anxiety over the Ukraine crisis as shares dropped in Japan and Hong Kong,along with US stock futures,and gold crested to a six month high.Oil rose as well.Now the vote for Crimea's annexation by Russia-totally dismissed by the West as a charade-has gone Moscow's way,unresolved issues both within Crimea itself and in Eastern Ukraine could rivet the attention of global markets in the days ahead.
The Crimean vote went 95% for seceding from Ukraine and joining Russia in an atmosphere of haste and armed intimidation by Russian troops,who were posted in armoured personnel carriers outside polling places.Anti-Putin activists and even some journalists were harassed,beaten and branded as traitors in the days leading up to the election.It was only safe for peaceful protestors on the outskirts of town,fearful of club-wielding toughs inspired by the Kremlin.
Largely unreported on TV news,the tension between Ukraine and Russia over Eastern and Southern Ukraine could make Crimea look like a picnic,with concentrations of troops on both sides mobilising in recent days.In Southern Ukraine,80 Russian troops occupied a village with a natural gas station over the weekend.The Eastern cities of Donetsk,Kharkiv and Lugansk are also potential flashpoints,threatening to become the biggest challenge to market sentiment since the dark days of the Eurozone crisis,as Nicholas Spiro of Spiro Sovereign Strategists put it.
A Russian invasion of Eastern Ukraine could raise geopolitical strife to a new high and ripple strongly through the global markets.
With worries around certain emerging markets,notably China and Ukraine at present-2014 is already shaping up as a more volatile year for shares,said Shane Oliver,head of investment strategy and chief economist at AMP Capital.
Investors may be looking over their shoulders at these exogenous events for the foreseeable future.