Ongoing political gridlock in the US, declining demand for Canada’s exports and Latin America’s increasing susceptibility to price fluctuations mean global economic growth in the third quarter of 2013 will remain subdued, according to a report by Bank of America Merrill Lynch Global Research.

Global economic growth could be lower than 0.7% in the third quarter of this year as slow growth in key economies such as the US continues to weigh on international growth. In the US, consumer confidence has been dampened by the government shutdown in early October. And Colombia and Venezuela’s heavy reliance on extractive resources has left both countries highly susceptible to exogenous shocks from depressed commodity demand, said the report.

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Weak consumer demand and continued uncertainty in Canada caused by reduced investment spending has led the Bank of Canada to downgrade its economic outlook for the country in the second half of 2013. Increased borrowing costs, and constrained investment demand and economic growth mean Russia’s growth will also be subdued.

Yet there were some bright spots, notably in the UK and Japan, which could mean global growth by the end of the year. The UK’s decision to help more than 400,000 people become homeowners could boost the country’s economic revival. In Japan, a 5.4% increase in core machinery orders in August has placed the country firmly on the path to recovery. Government plans to reduce corporate tax could further boost capital investment by 2% by the end of the year.

Furthermore the move by the eurozone economies to clean the debts on their banks’ balance sheets, as well as boost their banks’ efforts in lending to small and medium-sized enterprises (SMEs), indicates growth in the EU may be increasingly led by its SMEs.

Although a recent upsurge in Trans-Pacific Partnership (TPP) negotiations has significantly reduced the risks of national protectionism by creating a “wider liberalised network”, according to the report, substantial barriers to the TPP and increased international trade remain, as countries such as Malaysia have raised concerns over the TPP’s potential to erode national sovereignty.