Investors see big risk in U.S. fiscal woes

Jim Puzzanghera / Los Angeles Times /

WASHINGTON — Investors around the world say the fiscal woes of the U.S., highlighted by the ongoing fight over the debt limit, pose the biggest risk to the global economy this year, according to poll results released Wednesday.

More than a third of the respondents in the Bloomberg Global Poll — 36 percent — said the troubles in Washington addressing the huge U.S. budget deficit were their biggest concern. That topped the European debt crisis at 29 percent and the slowing of China’s economy at 15 percent.

Although the poll found the divisive political atmosphere was chilling investment in the U.S., the nation still easily ranked first as the best place to invest this year.

The U.S. was chosen by 38 percent of the 921 randomly selected investors, who could chose one or two markets as providing the best opportunities, with China at 31 percent and the European Union at 22 percent.

The likely reason: A majority of investors — 53 percent — said the U.S. economy was improving, compared with 32 percent for China and 16 percent for the eurozone.

The White House and Congress avoided the potentially calamitous “fiscal cliff” with a deal enacted Jan. 2 to extend most of the George W. Bush-era tax cuts. But they put off decisions about large automatic government spending cuts until the end of February.

Despite the threat of another contentious battle over the debt limit, which would be a repeat of 2011’s brinkmanship, 92 percent of global investors said the U.S. was unlikely to default on its sovereign debt.