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Even before the latest rise in oil prices, the average inflation rate in the G7 was set to rebound to over 2% early next year. In the US, Donald Trump’s planned fiscal stimulus should boost US demand at a time when the economy is already near full …
13th December 2016
Some have suggested that further appreciation of the dollar would pose a significant threat to the outlook for the world economy. In contrast, we think that the US currency is unlikely to strengthen dramatically from its current level. And even if it …
9th December 2016
After accelerating a little in Q3, business surveys suggest that the world economy has continued growing at a fairly rapid pace in the final months of 2016. Labour market data for the US have been encouraging, the eurozone and Japan are doing better than …
6th December 2016
The latest data show that global monetary conditions remain exceptionally accommodative. Monetary aggregates and bank lending to the private sector are rising at a steady pace, and although government bond yields have risen since the US presidential …
5th December 2016
Global oil prices jumped as much as 19% this week as OPEC finalised an agreement to cut production. However, this is not as big a deal as the headlines imply. Prices are only a little higher than they were in October, shortly after an output cut was first …
2nd December 2016
Business surveys released earlier today extend the run of upbeat data on the world economy. Markit’s global manufacturing PMI edged higher from 52.0 to 52.1 in November and is consistent on past form with global economic growth picking up to over 3.5% in …
1st December 2016
With President Trump set to implement a large fiscal stimulus next year, US inflation and interest rates will both rise more rapidly than seemed likely a month ago. This has already had knock-on effects on global exchange rates and bond markets, and has …
30th November 2016
The latest data show that global trade was more or less stagnant during the past few months. Looking ahead, President Trump is likely to take a tough line on trade negotiations and may well adopt aggressive protectionist measures. However, we do not think …
25th November 2016
The prospect of a large fiscal stimulus under a Trump presidency has prompted us to raise our forecasts for US growth and inflation but we have left our economic forecasts for the rest of the world largely unchanged. The main short-term effect may be felt …
24th November 2016
The “flash” PMIs for the euro-zone and US which were published earlier today reinforce the message that the world economy seems to be expanding at a decent pace in Q4, even before any “Trump stimulus” is announced. … Flash PMIs …
23rd November 2016
The election of Donald Trump is the clearest expression so far of the growing anti-globalisation sentiment across advanced economies. Initially at least, we think that his bark will prove to be worse than his bite, but it would be foolish to rule out the …
16th November 2016
The slump in global bond prices after the US elections and the accompanying rise in long-term interest rates will cause some pain both to existing bondholders and future borrowers. Nonetheless, context matters too. Yields are still very low by past …
15th November 2016
Since Tuesday’s election, financial markets have been buoyed by hopes that Donald Trump will unleash a huge fiscal stimulus. We think a significantly higher US budget deficit is now likely, which may provide a boost to growth and inflation in the US …
11th November 2016
Donald Trump’s victory in the US presidential election has, so far, had less impact on financial markets than most anticipated. We suspect that it has also made little difference to the immediate outlook for the global economy, but it has raised bigger …
9th November 2016
Investor concerns about the outcome of the US presidential election have caused substantial currency and equity market movements in the past few weeks. However, the Vix “fear gauge” has not yet risen as far as it did in the immediate aftermath of the UK …
7th November 2016
The jump in US average earnings growth, reported earlier today, is the latest indication that inflation there is on the rise. But aside from stronger oil prices, there is little sign of a broader pick-up in inflation. Indeed, there is still a bigger …
4th November 2016
The latest business surveys suggest that global manufacturing growth picked up last month. Markit’s global manufacturing PMI, released earlier today, climbed from 51.0 to 52.0 in October, its highest level in two years. On the basis of past form, it is …
2nd November 2016
A Trump victory in the US elections next Tuesday may send shockwaves through financial markets, at least temporarily. But the economic consequences for the world as a whole would be less dramatic. … What would be the global fallout from a Trump …
We estimate that world GDP growth accelerated slightly in the third quarter, due to the ongoing policyled rebound in China and a pick-up in activity in the US. However, the expansion will probably slow a bit in the next few quarters, in part because …
31st October 2016
Politicians have made increasingly strident attacks on central banks in many countries recently. But we doubt that these criticisms will lead to significant revisions to monetary policy regimes because no workable alternative has been proposed. Moreover, …
28th October 2016
Broad money and credit have been growing at a steady pace, against the backdrop of exceptionally loose global monetary conditions. In advanced economies, growth in lending to the private sector has stabilised at around 5% in the last year, while in …
26th October 2016
Notwithstanding one or two more positive signs, world trade remains in the doldrums. And the fact that the EU-Canada trade agreement may be scuppered by a regional Belgian government does not bode well for the future. … World trade still weak as Belgium …
25th October 2016
Preliminary survey data, which were published today, point to a significant acceleration in activity in advanced economies in October. … Flash PMIs …
24th October 2016
The failure of opinion polls or bookmakers to predict the UK’s June vote to leave the EU caught many investors by surprise. However, both polls and betting markets have a reasonable track record in predicting elections. And while financial markets are not …
19th October 2016
The world economy has shrugged off the result of the UK’s EU referendum and looks set to gain some momentum next year. In the US, rising core inflation will prompt the Fed to raise rates more rapidly than anticipated. But in most other advanced economies, …
Advanced economies have been suffering from weak underlying demand, partly due to a mix of demographic and technological changes. Looking ahead, there is some scope for a rebound in private investment and governments may try to boost demand by loosening …
17th October 2016
With central banks running out of firepower, public finances in a better state than they have been for a long time and sovereign bond yields exceptionally low, it is not surprising that some governments have recently scaled back their austerity plans and …
12th October 2016
The recovery in oil prices is a mixed blessing for global growth. We estimate that the contribution of energy costs to annual CPI inflation in the advanced economies will flip from an average of minus ½% now to as much as plus 1% early next year. However, …
11th October 2016
The upcoming Presidential election does not seem to be having much impact on economic activity either in the US itself or elsewhere. Admittedly, it looks at first sight as if recent movements in global equity markets have been driven by changes in Clinton …
6th October 2016
Global monetary conditions are still exceptionally accommodative and are set tor emain so even if the Fed raises rates in December, as we think is likely. Sovereign bond yields are close to record lows, and the yields on riskier bonds have fallen sharply …
5th October 2016
The tone of the IMF’s latest World Economic Outlook, published today, was decidedly gloomy. But we suspect that their forecasts will need to be lowered further over the coming year or so. … What to make of the IMF's latest …
4th October 2016
The manufacturing PMIs published today and late last week suggest that global growth was broadly steady in September. The biggest news was from the US where the ISM manufacturing survey rebounded sharply. … Global Manufacturing PMI (Sep. …
3rd October 2016
The Bank of Japan’s decision last week to begin targeting long-term bond yields marks a major shift in the conduct of monetary policy and is the latest sign that central banks are worried about the adverse side effects of very low long-term rates. In our …
30th September 2016
It is impossible to be sure what Donald Trump would actually do if he became US President but ourbest guess is that he would back away from his most radical proposals on trade policy. And even if he carried out his threats, the consequences would probably …
26th September 2016
Flash PMIs published today point to a small pick-up in growth in the manufacturingsector in Japan and the euro-zone, but a decline in the US. Advanced economies overallare still struggling, whereas recent news from China has been encouraging. … Flash PMIs …
23rd September 2016
The volume of world trade appears to have recovered a bit in the past few months.Even so, the prospects for global trade over the coming years remain poor, and couldworsen dramatically if Donald Trump wins the US Presidency in November. … Downturn easing, …
22nd September 2016
Average inflation in the G7 is likely be over 2% next year as the impact of past falls in energy prices fades. In the US, core inflation is already close to the target and will probably continue rising as the economy approaches full employment. Inflation …
16th September 2016
Weak US retail sales data for August, released earlier today, were the latest sign that the consumer recoveryin the developed world is losing pace. Even so, the prospects for household spending over the next fewyears are still fairly bright. This in turn …
15th September 2016
With global growth still lacklustre, monetary policy seemingly ineffective and government bond yields unprecedentedly low, the case for fiscal stimulus has become more compelling. Partly as a result, we now expect advanced economies overall to benefit …
7th September 2016
The latest surveys suggest that the UK economy has slowed but not slumped following the EU referendum, while growth in the world as a whole has remained sluggish. The US economy looks set to pick up a bit after a very weak first half of the year while …
6th September 2016
Without a crisis to concentrate minds, G20 leaders meeting in Hangzhou are unlikely to make any major policy breakthroughs. The truth is that there is little appetite for coordinated policy action, despite all the fine words to the contrary. That said, we …
2nd September 2016
Business surveys published earlier today paint a mixed picture of global manufacturing conditions. Activity in China appears to have stabilised, but the sharp fall in the US ISM index suggests, at face value, that manufacturing output there is contracting …
1st September 2016
Policymakers gathering in Jackson Hole last week highlighted that a fall in equilibrium real interest rates means that central banks may have little room to cut rates in the event of another recession. Unconventional policies such as QE and forward …
Money and credit growth in the major advanced economies have held up remarkably well this year, despite overall economic growth remaining lacklustre. Indeed, lending to households is now expanding more rapidly than at any point since 2008. … Lending …
26th August 2016
This week’s Jackson Hole conference is unlikely to shine much light on the immediate outlook formonetary policy either in the US or elsewhere. But it will underline how concerned many centralbankers are that they have little firepower left to respond to …
The latest available data show that the volume of world trade fell in Q2, although this does not seem to have dented global economic growth, which we estimate to have picked up from 2.1% annualised in the first quarter to 2.9% in the second. While the …
24th August 2016
Preliminary survey data for August, which were published today, suggest that economic growth remained slow but steady in advanced economies. Meanwhile, alternative survey evidence for the UK has been more reassuring than the PMIs for July. … Flash PMIs …
23rd August 2016
The global economy is set to expand by less than 3% for the second year running in 2016. That is a lot less than the 4%+ growth rates seen a decade ago. But in the grand sweep of history, current growth rates are not unusually weak, nor do they suggest …
18th August 2016
The world’s main current account imbalances look set to widen a bit in the coming years but should not pose a serious threat to the global economy. Oil producers’ surpluses probably won’t reappear, while the surplus in China and deficit in the US will …
16th August 2016
Unemployment has continued to fall steadily in most advanced economies, but there is still some sparecapacity left. Moreover, the link between unemployment and wage growth is weaker than in the past,so even as economies near full employment, inflation is …
10th August 2016
