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The final purchasing managers surveys for May show that manufacturers are struggling almost everywhere. The global manufacturing PMI, published by Markit earlier today, edged down to 50.0, extending a downward trend which began in mid-2013, and is …
1st June 2016
For all the talk of a sharp slowdown in the global economy this year, broad money and credit have been growing at a steady pace. In advanced economies as a whole, credit has increased by around 5% y/y in the past twelve months. And in emerging …
31st May 2016
In their declaration earlier today, G7 leaders claimed that “global growth is our urgent priority”. Promoting growth is a worthwhile aim but the implication that the world economy is on the brink of a recession is wide of the mark. Indeed, we see four …
27th May 2016
The recovery in oil prices should be a net positive for the global economy but is not without its downsides, including the support it might provide to the hawks at the Fed. … Five quick points on Brent at …
26th May 2016
A vote by the UK to leave the European Union would come as a major surprise and could trigger significant market turmoil. This would probably lead to the Bank of England keeping monetary policy looser for longer than it would otherwise have done. But we …
25th May 2016
The latest data confirm that world trade remained depressed in March, in part reflecting the weakness of global manufacturing. With little prospect of significant trade liberalisation in the coming years, trade growth is likely to remain subdued. That …
24th May 2016
Preliminary PMIs published by Markit today suggest that manufacturing activity in advanced economies eased in May. Indeed, it looks increasingly likely that economic growth in the euro-zone and Japan will slow in Q2. However, while the flash PMI for the …
23rd May 2016
This weekend’s G7 finance ministers meeting in Sendai, Japan, is likely to focus on exchange rate and fiscal policy and to end with another warning about the dangers of Brexit. However, no major policy announcements are on the cards. … What to expect from …
18th May 2016
Fears of deflation have eased since the beginning of the year as oil prices have rebounded and global growth has stabilised. However, the appreciation of the euro and yen and continued weakness of domestic price pressures suggest that the chances of the …
17th May 2016
The rapid expansion of emerging economies (EMs) over the past decade or two has reduced the scope for further “catch-up” growth. Along with this, many EMs are likely to continue falling short of their potential growth rates, meaning that aggregate growth …
12th May 2016
Employment growth in advanced economies has so far remained fairly resilient in the face of weaker global growth and we think labour markets will continue to tighten gradually in the coming months. However, only in the US are the conditions in place for …
11th May 2016
If the UK votes to leave the EU, there would probably be some negative fallout for the UK itself and other European economies due to the resulting uncertainty about their future economic relationship. But this should prove short-lived as all parties …
9th May 2016
The US economy looks set to regain some momentum in the second quarter after a weak performance in Q1 as the drags from previous dollar strength and the slump in oil prices continue to fade. But activity in the euro-zone will probably slow and there is …
6th May 2016
Manufacturing activity seems to have remained weak across the board at the start of the second quarter. Markit’s global manufacturing PMI, released today, slipped from 50.6 in March to 50.1 in April, extending a downward trend which began in 2013. On …
3rd May 2016
We estimate that global growth nudged up from 2.0% annualised in Q4 last year to 2.5% in Q1, largely due to a recovery in China. While there was a sharp decline in US GDP growth, its economy should regain momentum in the coming months. Along with the …
29th April 2016
Negative policy rates have come under attack in recent months, but most of the criticisms look overdone. We still think Japan will cut its policy rate further in June or July, while also stepping up its asset purchases. But those European central banks …
28th April 2016
Broad money and credit have been expanding steadily in most major advanced economies in recent months. They should continue to hold up well for the foreseeable future as global monetary policy will remain accommodative. However, the “credit impulse”, …
26th April 2016
Preliminary business surveys released earlier today suggest that manufacturing activity in advanced economies weakened further in April. This would be consistent with slow, but positive economic growth. … Flash Manufacturing PMIs …
22nd April 2016
The latest available data show that the volume of world trade recovered in February, fully reversing its decline in January. While the outlook for growth in the volume of world trade is fairly bleak, the value of trade should be boosted in the coming …
21st April 2016
With the three major advanced economy central banks holding policy meetings this week and next, we are sticking to our view that the next year or two will see a lot more divergence between monetary policy in the US and elsewhere than the markets have …
Global growth was sluggish in the first quarter, but it is likely to pick up a bit during the rest of the year. A policy-induced rebound in China and recovery in the prices of key commodities should result in slightly faster growth in emerging economies. …
19th April 2016
The IMF warned last week that the global economic recovery was at risk of slowing to “stall speed”, below which a recession becomes inevitable. However, there is little theoretical or empirical evidence to support this concept. Indeed, global growth also …
Fiscal policy in advanced economies is set to be loosened this year for the first time since 2010. Governments in the US and Canada have increased spending while budget deficits in many European countries will rise, in part due to the refugee crisis. …
15th April 2016
We are not convinced that negative policy rates will prompt households to save more, in aggregate, even though some may step up their savings for retirement. There are many other drivers of savings rates, and lower interest rates will tend to boost …
14th April 2016
Despite being revised down yet again, we think the IMF’s latest projections for global growth are still too high. This is partly because the IMF appears to be constrained by the official, government forecasts for China and India, but its projections for …
12th April 2016
Business surveys edged up in March but still point to global economic growth of only around 2%. In the US, jobs growth remained strong and, with core inflation pressures building, we think the Fed will raise rates three times this year, beginning in June. …
6th April 2016
Consumption growth has slowed in every major advanced economy over the past six months or so, but prospects for the rest of the year are mixed. Spending should pick up again in the US, where the fundamentals remain strong, whereas the consumer recovery in …
5th April 2016
The final Markit manufacturing PMIs, published today, suggest that, having slowed sharply in February, global manufacturing growth recovered in March. … Global Manufacturing PMI …
1st April 2016
Growing support for populist politicians and political parties in a number of countries has fuelled fears that the global economy is set for an era of greater protectionism. But while world trade is likely to remain sluggish in the years ahead, the risk …
31st March 2016
Broad money and credit have continued to grow at a steady pace since the start of the year while government and corporate bond yields have dropped back. The prospect of further easing from the ECB and Bank of Japan should ensure that global monetary …
30th March 2016
The volume of world trade contracted slightly at the start of the year and it is likely to remain sluggish in the coming months. However, the recovery in commodity prices, which we expect to continue, should provide a significant boost to the value of …
24th March 2016
Labour markets in all the major advanced economies have been tightening for several years, and in many cases they are now close to full employment. At face value this suggests that the world may be on the verge of a broad-based pickup in wage inflation. …
Preliminary PMIs published by Markit today suggest that, having slowed sharply in February, manufacturing growth in advanced economies remained very weak in March. The flash manufacturing PMIs rose slightly for the euro-zone and US, but fell in Japan. As …
22nd March 2016
Helicopter money may be the next big thing as policymakers reach the limits of standard unconventional policies. In theory, it can fund an unlimited increase in both public spending and the money supply. In practice, though, it need not be as radical as …
21st March 2016
Emerging economies will not regain their pre-crisis growth rates any time soon, but we think they will recover this year and continue to grow more quickly than advanced economies. What’s more, they now account for more than half of world GDP. Overall, …
18th March 2016
Headline inflation in most advanced economies should rise towards the end of this year, when the effects of the past slump in energy prices finally drop out of the annual comparison. Core inflation has already picked up in the US and, with the …
15th March 2016
The management of the IMF has suggested that the world economy is slowing sharply and warned that things could get a lot worse. But in our view, although global growth may have slipped a little recently, it is not grinding to a halt, and neither have the …
9th March 2016
Negative interest rates have come under attack recently, but in our view most of the criticisms are over-stated. In particular, the costs of negative rates for commercial banks appear to be very small, and, despite the recent comments by the Bank for …
8th March 2016
Financial markets have recovered some poise since mid-February. This may be due to some more encouraging economic data from the US, which has dispelled fears that it is on the verge of a recession. There are also rising expectations of further policy …
3rd March 2016
The final manufacturing PMIs for February, published by Markit today, suggest that manufacturing activity slowed in 19 of the 24 economies for which data are released . … Global Manufacturing PMI …
1st March 2016
The G20 was probably right to include UK exit from the European Union on its list of potential risks to the global recovery, especially given the precedent of the euro-zone crisis in 2011-12. However, the negative impacts of ‘ Brexit ’ are likely to be …
29th February 2016
There is undoubtedly less scope for policy easing than there was a few years ago, but the charge that central banks are now powerless is, in our view, exaggerated. For a start, policymakers still have room to cut deposit rates further and expand their QE …
25th February 2016
With the exception of 2009, the value of world trade fell more sharply in dollar terms last year than in any other year during the past two decades. However, this was largely due to the slump in commodity prices. The volume of world trade actually …
Calls for co-ordinated policy easing ahead of this weekend’s G20 meeting will almost certainly cometo nothing. However, officials should at least seek to reassure investors that the world is not on theverge of a fresh crisis and that they still have some …
24th February 2016
Last year, the slump in oil prices turned out to be less of a bonanza for the world economy than most had anticipated. This year we expect oil prices to be more stable, but still relatively low. In these circumstances, the positives should finally …
23rd February 2016
Flash PMIs published today point to a fairly sharp slowdown in manufacturing growth in advanced economies in February. The flash manufacturing PMIs for the euro-zone, Japan and the US all fell. As a result, a weighted average of the three dropped from …
22nd February 2016
Despite the persistence of low oil prices we still think that inflation in the major advanced economies will rise this year. That said, it is only likely to increase substantially above 2% in the US, while in the euro-zone and Japan, underlying inflation …
19th February 2016
Broad money growth has slowed somewhat in the four major advanced economies in recent months. However, bank lending to the private sector, which is a better guide to economic prospects, has generally held up better. … Credit growth still strong in the …
17th February 2016
The recent declines in global equity prices may negatively affect household consumption via confidence and wealth effects, but any impact should not be huge. It would probably take further sharp falls, or a slowdown in property markets, to have a …
15th February 2016
In principle, cutting policy rates into negative territory should boost growth and inflation. But central banks have not communicated these benefits clearly, and the hesitant way in which they have been introduced has undermined confidence, raising the …
12th February 2016
