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We expect 2018 to be another year of fairly strong economic growth, led by household consumption and business investment in advanced economies. Inflation will remain subdued, other than in the US where we think it will rise above the target by year-end. …
19th January 2018
Claims that cryptocurrencies will replace established fiat currencies are rubbish; our view is that Bitcoin is a bubble. Indeed, the latest price falls suggest that the bubble is bursting – although with prices still ten times higher than a year ago, they …
17th January 2018
We expect oil prices to fall back from their three-year high in the coming months due to increasing supply. But even if prices stayed around $70pb, they would not endanger the global economy. The resulting rise in inflation would be small and short-lived, …
12th January 2018
Monetary conditions should stay accommodative this year, even though the ECB has scaled back its asset purchases this month and the Fed will continue to gradually reduce its balance sheet. Bank lending is also likely to keep growing steadily. … Bank …
11th January 2018
While the global economy is set to grow strongly again in 2018, the recovery is likely to de-synchronise somewhat as China slows before the US, and Europe remains strong. This could have important implications for both policymakers and financial markets. …
10th January 2018
We estimate that household spending growth in the world’s major economies picked up from 3.1% in 2016 to 3.7% in 2017. In 2018, it is likely to grow at a similarly decent pace to last year, as real disposable incomes recover, consumers remain upbeat and …
9th January 2018
Global activity indicators suggest that the world economy ended 2017 on a very strong note. We expect this strength to continue in the near term, helped by a steady rise in employment and supportive policies. The soon-to-be-finalised fiscal stimulus in …
5th January 2018
Markit’s global manufacturing PMI rose to a near seven-year high in December, adding to evidence that the world economy ended 2017 in very good shape. We expect 2018 to be another year of strong growth. … Global Manufacturing PMI …
2nd January 2018
We expect 2018 to be another year of strong global growth, helped by a steady rise in employment and supportive policies, including a small fiscal stimulus in the US. In most advanced economies core inflation will rise too slowly to reach the targets. …
21st December 2017
There are reasons why the US Federal Reserve should be further along the path to policy normalisation than other major central banks. But there are also reasons why they should not lag too far behind. … Should other central banks follow the …
19th December 2017
Many advanced economies are close to full employment, but this is likely to lead to only a small increase in price pressures. We expect the core inflation rate to edge up in the euro-zone, Japan and US next year. And if oil prices drop back, as we expect, …
15th December 2017
Preliminary business surveys for December, which were published today, indicate that advanced economies in aggregate ended 2017 growing at a heady pace of around 4% annualised. They also suggest that the euro-zone will begin the New Year as the most …
14th December 2017
There are many reasons to think that inflation targeting has had its day. The framework has already evolved to some extent, with central banks adopting “flexible” inflation-targeting and macroprudential tools. But arguably this flexibility does not go far …
13th December 2017
Consumer confidence has surged to its highest level since 2000 in advanced economies but consumption growth has not picked up. We think this is largely due to weak real wage growth. As tight labour markets feed through to slightly higher pay growth in …
11th December 2017
Unlike the bubbles in the tech sector in the late-1990s and in US residential property a few years later, a bursting of the bitcoin bubble should not have systemic, macroeconomic implications. The total value of bitcoin is (still) too small, and it has …
8th December 2017
Provided that they follow the blue-print set out by the US Fed, the world’s major central banks should be able to scale back their balance sheets over the coming years without huge adverse economic consequences. The key is for them to do so slowly, …
7th December 2017
The world economy has continued to experience fairly rapid growth. Manufacturing output and global trade have picked up, and the latest business surveys and measures of consumer confidence have remained strong. The economic expansion is broad-based, with …
6th December 2017
Monetary and credit conditions remain supportive and should continue to be so, even though the stock of assets purchased under global QE programmes should peak in the coming years. … Credit growing at a healthy …
4th December 2017
There has been no let-up in the fast pace of global growth in November. Manufacturing PMIs remained strong and/or increased almost everywhere and the global index is at its highest level since March 2011. … Global Manufacturing PMI …
1st December 2017
Despite the fact that core inflation in advanced economies has generally remained very low, policymakers are committed to reducing policy support and/or raising interest rates next year. Fed officials have strongly hinted that they will raise interest …
28th November 2017
The latest CPB data suggest that world trade volumes held on to recent gains in September. Other indicators have been even more upbeat, and the signs are that trade is maintaining momentum in Q4. … World trade on track for a strong …
24th November 2017
Preliminary surveys, published by Markit yesterday and today, point to a further pick-up in economic growth in the world’s largest advanced economies in November. … Flash PMIs …
It is often claimed that the yield curve is a good leading indicator of economic growth, with inversions signalling impending recessions. But its track record suggests that it shouldn’t be relied upon too heavily. … Is the yield curve a crystal ball for …
22nd November 2017
Ten years after the beginnings of the global financial crisis, the risks of something similar occurring again in the near future appear to be fairly low. The amount of risky lending has been reduced, and asset prices are not generally as over-valued as …
21st November 2017
Although their finances will come under some pressure as interest rates rise, households in most advanced economies should be able to cope. Debt burdens are low by past standards and, provided that policy rates don’t rise much further than we expect, debt …
17th November 2017
Fears that Donald Trump’s election sounded the death knell for globalisation have so far proven wide of the mark. Admittedly, there are still some threats to the outlook, and there is little chance of a further wave of liberalisation. But the recovery in …
16th November 2017
In our view, the tightening of global monetary policy in the coming years need not be all that substantial. This is largely because equilibrium interest rates have fallen a long way in the past few decades, which in turn means that central banks will not …
So far, Brexit has not had the huge adverse effects on the UK which many anticipated, and it has not caused any political upsets in the rest of Europe. It looks like there will be no major changes in the rules governing the UK’s economic relationship with …
15th November 2017
We think the average inflation rate in advanced economies will remain lower than it was in the pre-crisis period for the foreseeable future, for several reasons. In some economies, there is more spare capacity around than meets the eye; in others …
13th November 2017
Although debt-to-GDP ratios in advanced economies remain high by historical standards, they are at least on sustainable trajectories. Accordingly, fiscal austerity and household deleveraging appear to be at an end and will no longer be a drag on global …
10th November 2017
We continue to think that the latest leg-up in oil prices will be reversed. If not, there would be some upward pressure on global inflation, though little effect on demand, in the coming year or two. … Four charts on the latest oil price …
9th November 2017
If “normal” means the under-regulated and over-leveraged state that they were in before the crisis, then that is the last thing we need the world’s banks to return to. Thankfully, however, that does not seem to be happening. Rather, the banks are …
8th November 2017
We estimate that the world economy expanded at a healthy pace of around 3½% annualised in Q3, as the US, euro-zone and UK all grew at a decent pace. Employment has been rising steadily, with jobs growth in the US rebounding in October as the …
7th November 2017
The seeds of the financial crisis were sown in the interaction of four key factors, linked by one critical underlying problem. This was an intellectual failure across financial institutions, policymakers and regulators, who believed that the markets knew …
3rd November 2017
The latest batch of manufacturing surveys suggests that advanced economies continued to do very well in October. As a result, the global manufacturing PMI rose to its highest level since early 2011, and is still consistent on past form with world GDP …
2nd November 2017
Credit growth has continued to pick up gradually in the euro-zone and Japan, and more strongly in the UK. In the US, the slowdown in growth in lending to the private sector has eased recently. … Bank lending still rising …
Pessimism about the potential for future productivity growth and hence increases in living standards, based on recent poor productivity performance, is not well-founded. It provides no good reason to believe that the world is now incapable of technical …
1st November 2017
The world economy looks to have maintained momentum in Q3. We expect another strong quarter to round off the year, and then for global growth to slow only modestly throughout 2018. … Global economy to remain in good …
31st October 2017
We think that financial markets are right to take a relaxed view of the constitutional crisis in Catalonia. The economic fallout for Spain itself should be small, and the risks to the euro-zone are even smaller. … Catalonia impasse is not a new euro-zone …
30th October 2017
Taking account of the ECB’s decision yesterday and of recent changes to our forecasts for Japan, we still think that the scale of central bank asset purchases under QE programmes in advanced economies will slow steadily. But it will be a couple of years …
27th October 2017
The Bank of England is set to hike its policy rate for the first time in a decade at its meeting next week, and the US Fed is on course to raise rates again in December, while continuing to unwind QE slowly. Meanwhile, the ECB has announced its plans to …
The latest CPB data suggest that world trade volumes rebounded in August. Taking a range of indicators into account, the big picture is that the global trade recovery is still underway. … World trade strengthens while NAFTA talks …
24th October 2017
Preliminary PMIs, published by Markit today, suggest that manufacturing growth in advanced economies started Q4 on a strong note. However, they also indicate that price pressures are still subdued. … Flash PMIs …
The steady economic expansion in advanced economies is set to continue for the next year or two, led by rising household consumption and business investment. Although most economies are approaching full employment, inflation will probably remain subdued. …
19th October 2017
Fiscal policy in advanced economies is likely to be slightly accommodative next year, providing a benign backdrop for the world as monetary support is withdrawn. But any direct benefits will be modest. … What are the prospects for fiscal …
17th October 2017
Interest rate hikes are commonly thought to cause recessions. However, the track record of G7 tightening cycles shows that this has usually not been the case. Central banks in the US and Canada are in the midst of policy tightening cycles, and the …
12th October 2017
We expect global growth to slow only modestly as the era of easy money starts drawing to a close. The monetary tightening is set to be gradual, limited and staggered, with some countries only starting to tighten as others are finishing. And the …
11th October 2017
The tone of the IMF’s latest World Economic Outlook, published today, was upbeat and in line with our view that the outlook for the global economy is reasonably bright. But the Fund’s projections still look too pessimistic for the UK, and too optimistic …
10th October 2017
