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The new US administration has made a lot of noise about currencies during its first few weeks. But there is little chance of it engineering a move away from the system of free-floating exchange rates between advanced economies, and none whatsoever of it …
16th February 2017
OPEC is unlikely to sustain the production cuts which it implemented in January, but we expect a combination of rising global demand and increased US shale production to keep prices fairly stable for the next year or two. For the world as a whole, this …
13th February 2017
Household spending has picked up in advanced economies recently, and a combination of strong labour markets, lower debt burdens and loose monetary conditions means the outlook is fairly bright. … What are the prospects for consumer …
10th February 2017
The lesson of 2016 is that political shocks often have limited economic consequences. This implies that a period of political chaos or paralysis in Washington may not make much difference to the US economy. However, we suspect that success for eurosceptic …
7th February 2017
Business surveys point to a pick-up in activity at the beginning of the year, particularly in advanced economies. Indeed, the US economy and labour markets are approaching full capacity even though President Trump has not yet announced his planned fiscal …
3rd February 2017
The new “future output” indices, released by Markit alongside their usual complement of PMI data, at best track, rather than lead changes in economic growth. But they do appear to provide a useful check on the headline figures around one-off events such …
In this Focus we consider the outlook for the world economy this year and next, in light of two of the biggest concerns which have preoccupied investors in recent months: US economic policy under President Trump and prospects for China. In both cases we …
2nd February 2017
If the US introduces an across-the-board tariff or border adjustment tax, world trade would not com to a standstill. We suspect that other governments would tread carefully before ratcheting up a trade war, but that they would eventually retaliate in some …
1st February 2017
Business surveys published by Markit earlier today point to a broad-based pick-up in growth at the beginning of the year, with advanced economies in particular gaining momentum. They also signal a further increase in headline inflation in the months …
We estimate that world GDP growth was unchanged in Q4 last year at around 3½% annualised. This is well below its pre-crisis average, but is fairly rapid by more recent standards. What’s more, we expect global growth to remain fairly strong in both 2017 …
31st January 2017
The widespread pick-up in activity and rebound in inflation in advanced economies during recent months has reduced the pressure for central banks to ease policy further. But only in the US do we expect interest rates to rise sharply. With economic growth …
27th January 2017
The pick-up in world trade in the last quarter of 2016 adds to the evidence that the global economy gained momentum late last year. But the key question is whether the new US administration will bring this recovery to an end. Donald Trump’s first few days …
25th January 2017
For now, we don’t know what the US policy will be towards the dollar. If Donald Trump seriously wants a cheaper currency, the best way to achieve it might be through a multilateral agreement comparable to the 1985 Plaza Accord. But reaching such an accord …
24th January 2017
Preliminary PMIs, which were published by Markit today, suggest that growth in the world’s largest advanced economies started the year on a positive note. As such, they do nothing to change our view that global growth is likely to accelerate a bit this …
The world economy looks set to grow more rapidly this year than last. A substantial fiscal stimulus in the US will boost its growth rate, but will have only a limited impact on the rest of the world. With price pressures building in the US but not …
20th January 2017
On the eve of Donald Trump’s inauguration, we still have little detail on what trade policies he will pursue. Here we set out the potential global impact of the various measures he and his team have proposed. … Reconsidering the threat to global trade …
19th January 2017
Consumer price inflation is set to rise sharply in most advanced economies, with the US rate likely to reach around 3% by the middle of this year. However, talk of “global reflation” seems wide of the mark. In many countries, underlying price pressures …
11th January 2017
The world economy is entering 2017 with stronger growth and rising inflation, but prospects for the rest of the year are more mixed. Activity has picked up in unison across the major economies in recent months, and the recent rise in energy prices will …
6th January 2017
The final PMIs for December 2016 add to evidence that the world economy was in good nick at the end of last year and that price pressures have increased. We expect global growth to pick up a bit this year, and headline inflation to rise substantially. … …
3rd January 2017
The latest data show that world trade fell in October, continuing the renewed slowdown since 2015. Looking ahead, while world trade is unlikely to collapse, it will probably remain sluggish for years to come. … Prospects for world trade still …
22nd December 2016
We expect growth in the US to pick up next year as a result of Donald Trump’s planned fiscal stimulus, but in several other advanced economies it is likely to slow. Although headline inflation is set to rise almost everywhere, core inflation should remain …
20th December 2016
Preliminary PMIs, which were published by Markit today, suggest that growth in advanced economies picked up in December and provide more evidence that the world economy is ending the year on a strong note. … Flash PMIs …
15th December 2016
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
