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Growth outlook mixed across the globe

Jim Rothenberg
Portfolio manager
Based in:
Los Angeles
Investment experience:

KEVIN CLIFFORD: Hello. I’m Kevin Clifford, president of American Funds. As we approach the end of 2012, I’m pleased to have with me Jim Rothenberg, chairman of both The Capital Group CompaniesSM and Capital Research and Management CompanySM. In addition, Jim is a portfolio manager for The Growth Fund of America® and Washington Mutual Investors FundSM.

Jim, thanks so much for being with us today.

When we sat down to talk about this a year ago, it was your sense that if we were surprised in the United States, it would be economic growth and markets doing better than any of us would have expected. That’s come to pass. When you look out at 2013 and beyond, can you share your sense with us today?

JIM ROTHENBERG: Economic growth did happen, but it hasn’t been extremely rapid. Economic growth was around people’s expectations in the U.S. — a little slower in Europe and a little slower in the emerging countries than might have been expected. But what has really been surprising is how strong markets have been, particularly equity markets. And by the way, the strongest has been the U.S. in many respects.

So as we go into 2013, I think you have to go back to the same set of issues to try to think about, which is “What does the shape of economic growth look like?”

My expectation is that growth here will be positive. It will continue to see improvement that will muddle along, will have a reasonable growth rate — probably 2-plus%. There may be some fits and starts around the fiscal-cliff issues, but will still be positive.

So that gives you a reasonable backdrop. And I expect not so much Europe — which, I think, verges on a fairly difficult recession, in fact — [but] we’ll likely see the emerging countries begin to see growth rates accelerate. Not each and every one.

The Chinese have just gone through a once-in-a-decade change in their leadership. This is a very internal event. It’s very fraught; there’s a lot of jockeying for position that goes on. But then, of course, once this is set — which it has been now — you now have a whole cadre of Chinese politicians who are very interested in seeing the system do well.

So now they’ve been through all of the internecine wars. Now they’ve got to get focused on getting the country back on a growth path and continuing to grow. And there are some small signs — so far, very anecdotal — that things are starting to get better there, which would be a big plus.

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