World economy in best shape since 2011

The world economy is in its best shape in 18 months, as China’s prospects improve and the US looks likely to avoid the so-called fiscal cliff, according to the latest Bloomberg Global Poll of investors. Two-thirds of the 862 surveyed described the global economy as either stable or improving.

That’s up from just over half who said that in September and is the most since May 2011. The US came out on top for the eighth straight quarter, when investors were asked which markets would offer the best opportunities over the next year. China ranked second, reversing a decline to fourth in the September poll of investors, analysts and traders who are Bloomberg subscribers.

The European Union, beset by a debt crisis, was seen offering the worst returns. The Federal Reserve is expected to provide continued support to the bond market after its Operation Twist programme ends next month, according to the poll. About three in four said the US central bank will begin outright purchases of Treasury securities after its plan for swapping short-dated securities for longer-dated ones expires. Half of those surveyed said they don’t expect a military strike against Iran’s nuclear programme in 2013.