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Recent financial market turmoil has prompted speculation that G20 finance ministers and central bank governors will discuss the merits of closer exchange rate coordination at their gathering in Shanghai later this month. However, there is not even a …
11th February 2016
While some recent survey evidence has hinted that loan growth in the US may be about to slow, money and credit data in the four major advanced economies as a whole so far provide little support for the view that the world is on the verge of a broad-based …
Experience since 2009 shows that the current crop of central bankers do not hesitate to change course if they think that is the right thing to do. Indeed, central banks in numerous advanced economies have tightened policy since the global financial crisis …
9th February 2016
The recent problems in many emerging markets have revived fears that the world is only now entering a ‘third leg’ of the global financial crisis (GFC) – the first being the meltdown in the sub-prime mortgage market in the US in 2008 and the second the …
8th February 2016
While the latest data have raised fresh questions about the strength of the US economy, we think activity will recover because income growth remains strong while the drags from dollar appreciation and the downturn in the mining sector should fade. Growth …
4th February 2016
The Bank of Japan last week became the fifth central bank to impose negative rates and we now expect it to lower its deposit rate to -0.7% by the end of this year. If policy eventually needed to be loosened further, we think central banks could cut rates …
2nd February 2016
Business surveys for January provide further evidence that global economic activity is holding up well in contrast to fears of a sharp downturn. Growth in China slowed early last year, but appears to have been stable in recent months. In the rest of the …
1st February 2016
We estimate that world GDP growth fell below 2% annualised in Q4 2015, its slowest pace in over three years. But growth should rebound to 3% or so this year, as China, Japan and the US regain some momentum and the downturn in commodity-exporting economies …
29th January 2016
Over the past few years, the governments of most advanced economies have made a lot of progress in repairing the damage caused to their public finances by the global financial crisis. The majority should not need to tighten fiscal policy much further in …
28th January 2016
This Focus addresses two of the biggest concerns which have undermined confidence in the global economy and markets this year: worries over China and the further slump in the oil price. While recognising the many risks, we remain more upbeat than most on …
27th January 2016
Another day, another record low for the Baltic Dry Index (BDI). However, while this measure of sea freight costs may be a helpful guide to the balance of supply and demand for certain commodities and the ships that carry them, there are other, much better …
The turmoil in global markets since the beginning of the year is not, in our view, a sign that the world economy is heading for a recession, but the fall in oil prices will have a knock-on effect on inflation. While not a “game-changer”, it has reinforced …
26th January 2016
Today’s Markit PMIs show manufacturing growth holding broadly steady in January, and provide no evidence of the collapse in economic activity that many seem to fear. … Flash Manufacturing PMIs …
22nd January 2016
The latest available data show that world trade growth slowed a bit further towards the end of 2015, but they do not point to a sharp downturn. What’s more, preliminary business surveys for January, which were published today, suggest that export orders …
Despite the prevailing gloom about the world economy, we think global growth will pick up from around 2½% last year to 3% in both 2016 and 2017, using our own estimates for China. Growth should be little changed in the US this year and will probably slow …
20th January 2016
The IMF today downgraded its forecasts for global growth this year and next, leaving them closer to our own. It also stressed that prospects for China have not deteriorated markedly in recent months, which has been a key theme in our research. Even so, we …
19th January 2016
Broad money and private sector credit have continued expanding steadily in recent months. In advanced economies as a whole, credit has been growing rapidly while in emerging economies it has slowed but only gradually over the past five years. Overall, …
15th January 2016
Suggestions that the global recovery is likely to run out of steam simply because the business cycle is now quite mature look wide of the mark. Indeed, the recoveries in most G7 economies are still in their infancy and the duration of expansions has …
14th January 2016
Based on our new oil price forecasts we expect inflation in advanced economies to rise more gradually this year than previously anticipated. This will add to pressure for further policy loosening in the euro-zone and Japan, but it should have less impact …
12th January 2016
In our view, China is likely to keep its currency broadly stable in trade-weighted terms in the coming months. However, if there were a large, across-the-board devaluation of the renminbi the fallout for the rest of the world would be negative, albeit not …
8th January 2016
Concerns about China’s economic prospects have rattled investors in the past few days. However, we think China’s economy will pick up in the coming months. Overall, the latest economic data do not point to a slowdown in activity, credit growth has …
7th January 2016
The final Markit manufacturing PMIs for December, which were published today, suggest that momentum was slowing at the end of last year. The euro-zone gained a bit more momentum, but this was outweighed by weakness in the US and China. … Global …
4th January 2016
The volume of world trade fell in October, continuing a run of weak data which has lasted all year. Exports from emerging economies have been particularly sluggish. … World trade still sluggish at start of …
24th December 2015
Household consumption in advanced economies has risen more rapidly in 2015 than in any other year since the global financial crisis. We expect it to continue expanding steadily for the next year or two. Labour markets conditions are improving, household …
22nd December 2015
Advanced economies are likely to continue their steady recovery during the coming year or two, albeit with the euro-zone and Japan still lagging well behind the US and UK. Tighter labour market conditions should push inflation up rapidly in the US, but …
18th December 2015
Flash manufacturing PMIs for December show continued steady growth in the eurozone and Japan, but they also underline how much the US manufacturing sector is struggling. That said, we doubt that this will prevent the Fed from hiking later today. … Flash …
16th December 2015
Notwithstanding the renewed slump in oil prices, headline inflation is set to rise sharply in most advanced economies as last year’s much larger falls in energy costs drop out of the annual comparison. In the US, further declines in the unemployment rate …
15th December 2015
Late on Friday the People’s Bank of China (PBOC) appeared to signal its intention to shift towards managing the renminbi against a currency basket rather than the US dollar. This has added to nervousness in global markets, but we think that concerns …
14th December 2015
The latest slide in the price of crude oil is clearly unsettling the financial markets, but it should not materially affect the prospects for the global economy. Even if prices remain below $40 per barrel, this would not prevent inflation from rebounding …
We do not think that higher US interest rates will derail the global recovery next year. The Fed is only likely to tighten policy if the economy continues to do well. Other major central banks will also be in no hurry to follow, meaning that global …
9th December 2015
There is no doubt that world trade growth has slowed sharply this year. However, we are wary of reading too much into the latest slump in trade. Exports from and imports to advanced economies have held up well, and there are tentative signs that overall …
8th December 2015
The world looks in good shape to cope with the tightening in US monetary policy which we think will, finally, begin later this month. The November Employment Report confirmed that the US economy is still recovering, despite the pain being inflicted on the …
4th December 2015
Manufacturing PMIs suggest that global manufacturing growth remained steady in November, despite a sharp slowdown in the US. … Global Manufacturing PMI …
1st December 2015
The broad money supply is growing steadily and the growth of credit to nonfinancial companies has been recovering in recent months. With bond yields still very low and several central banks likely to loosen policy over the coming year, monetary conditions …
30th November 2015
After many delays we think the US Fed will – finally – raise rates in December. However, the global easing cycle is likely to continue next year,for several reasons. Underlying inflation in Japan and much of Europe is set to stay well below central bank …
26th November 2015
World trade growth remains frail largely as a result of the continued lacklustre performance of emerging economies. However, we don’t think this is an early sign of a widespread downturn in the global economy. … Weak EMs drag down global trade …
24th November 2015
Flash PMIs published today and yesterday suggest that manufacturing growth has continued at a moderate pace in advanced economies in November, notwithstanding the weakness of some emerging economies. … Flash Manufacturing PMIs …
This Update aims to provide some perspective on the recent slides in oil and copper prices and the new record lows for the Baltic Dry Index of global shipping costs. It includes a more positive view on the outlook for copper (and other industrial metals) …
20th November 2015
Advanced economies have proved resilient this year in the face of a slowdown in emerging markets (EMs). As it happens, we think EM growth is likely to recover, gradually, in the coming months. But even if it doesn’t, the fallout for the rest of the world …
The continued slide in the price of copper has added to concerns about global growth. However, the industrial metal’s track record at diagnosing the health of the world economy has actually been shaky for many years. Other, better indicators are now …
18th November 2015
While media headlines have focused on low energy prices and the risks of deflation, core inflation has actually risen in most advanced economies in recent months. However, it has done so for very different reasons; in the euro-zone and Japan, currency …
The annual G20 leaders’ summit, to be held in Turkey on 15-16 th November, should be less acrimonious than many previous gatherings. Tensions over exchange rate policy, global imbalances, fiscal and monetary policy have marred many previous summits, but …
13th November 2015
The renewed weakness in global commodity prices, notably oil and copper, is obviously a concern forproducers and will continue to constrain activity in the mining sector. However, the current pessimismlooks overdone. We still expect prices to recover …
The OECD’s warning yesterday that weak trade growth may herald an economic downturn is wide of the mark. Trade in goods has continued to grow in line with industrial output and the link between trade and economic growth is, in any case, not particularly …
10th November 2015
Although the addition of China’s currency to the SDR basket may provide a short-term boost for the renminbi, its appeal as a reserve asset will be constrained by lack of convertibility and liquidity and by concerns that China’s economy and markets are not …
6th November 2015
Concerns that a hard landing in China may tip the world into a fresh recession look increasingly wide of the mark. The latest business surveys and credit data suggest that China itself may be regaining some momentum. In the US, the strong dollar and low …
5th November 2015
Many commentators have suggested that the next global recession may be just around the corner. In contrast, our view is that the balance of risks to world growth this year and next now lies on the upside. This Update summarises six reasons why the …
Unemployment rates in the US, euro-zone, Japan, and UK are likely to continue falling gradually over the coming years. However, the prospects for wage growth in these four economies vary considerably. … What are the prospects for labour markets and …
4th November 2015
The final Markit manufacturing PMIs for October reinforce our view that global growth is holding up much better than many seem to fear. Indeed, the headline readings for the US, China, the euro-zone and Japan all rose compared to September. … Global …
2nd November 2015
Data released so far indicate that the world economy held up fairly well in Q3, contrary to widely-held fears of a sharp deceleration. What’s more, global growth is likely to strengthen over the coming year or so as China’s policy stimulus feeds through …
30th October 2015
