What Washington does – or doesn’t do – has major consequences around the world in developed, as well as emerging countries. That’s the conclusion of leading economic and financial experts who spoke at a Bloomberg panel discussion I moderated recently. The panel was attended by more than 20 foreign correspondents and a dozen select clients.

Congress needs to reach some sort of budget agreement before Christmas to settle the “extreme uncertainty” in the marketplace, said Barbara Novick, BlackRock Vice Chairman, Head of Public Policy & Government Relations. Otherwise, companies will continue to hoard cash and hold back on spending, she said, adding that much more work needs to be done on Dodd-Frank in 2013, too.

Torsten Slok, chief economist at Deutsche Bank Securities, said that if the US goes over the “fiscal cliff,” it would be a “significant shock” to the gross domestic product. He added that the cliff makes it difficult for even the Federal Reserve to formulate its monetary policy, he said.

Emerging markets are “very sensitive to changes in the rate of growth in the U.S.,” said Pablo Goldberg, global head of emerging markets research at HSBC. He told the panel that, “The fiscal cliff is a very important headwind for the emerging markets.”

Eric Lascelles, chief economist at RBC Global Asset Management, said it is still open ended as to whether Europe’s austerity method was working better. “Austerity is indeed incredibly painful,” for struggling debtor nations like Greece and Spain.

Energy will play a big role in global growth in 2013, said Christian O’Neill, an oil and gas analyst at Bloomberg Industries. Crude oil prices could be lower here in the US, if shale production continues. But, he added, that there are major concerns about the new drilling methods’ effect on water resources and other surrounding environments.

 

Click HERE  to watch the full panel discussion about the impact of the U.S. elections and budget talks on global markets.

 

 

(left to right: Barbara Novick, BlackRock Vice Chairman, Head of Public Policy & Government Relations; Torsten Slok, chief economist at Deutsche Bank Securities; Pablo Goldberg, global head of emerging markets research at HSBC; Eric Lascelles, chief economist at RBC Global Asset Management; Christian O'Neill, oil & gas analyst at Bloomberg Industries)

— by William D. Cohan, Bloomberg View columnist