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Monetary conditions remain highly accommodative in most advanced economies, notwithstanding the rise in corporate bond yields since the beginning of the year. Meanwhile, broad monetary aggregates are expanding and private sector credit is rising at a …
28th October 2015
The US Fed now looks likely to leave interest rates unchanged until next March before tightening policy more rapidly than the markets anticipate. Many other major central banks, meanwhile, are still on track for further policy easing. In particular, ECB …
Preliminary PMIs published by Markit today suggest that activity in advanced economies picked up in October. Claims that the world economy is in the throes of a broad-based downturn are clearly overstated. … Flash Manufacturing PMIs …
23rd October 2015
The volume of world trade fell again in August, continuing its weak run this year. Exports from emerging economies have been particularly sluggish, although they have held up much better in volume terms than in values. … Advanced economy exports …
This week’s news that the ECB discussed cutting its deposit rate further below zero has revived discussion of the limits to, and effects of, negative interest rates. Their use by several European central banks shows that cutting rates below zero has a …
The collapse of oil prices since mid-2014 has exposed the huge variation in the public finances of the world’s major oil exporters. Poorly managed emerging economies such as Russia and Venezuela had no resources with which to cushion the blow whereas the …
22nd October 2015
The global recovery has slowed this year but is likely to accelerate again during the coming quarters. We expect world GDP growth to be only 2½% for 2015, using our own estimates for China, but to pick up to over 3% in both 2016 and 2017. China itself …
20th October 2015
Headline inflation fell below zero in a number of major economies in September, but we expect the latest bout of deflation to be short-lived. That said, the further drop in inflation expectations in Japan and the euro-zone over the past few months …
15th October 2015
We estimate that global GDP growth will slow to around 2½% this year, taking into account ourassessment of China’s actual growth rate. However, the world economy should recover in 2016 asactivity in China picks up and output in Brazil and Russia …
9th October 2015
Disappointing payrolls data from the US, weak commodity prices and another downbeat set of business surveys have fuelled fears that global growth is collapsing. However, we continue to think these worries are overdone. While some key emerging economies …
7th October 2015
The recent turbulence in equity markets has highlighted how vulnerable global investor sentiment is to developments in China, but the risks to the world economy are smaller than many assume. Although China’s growth has slowed sharply in recent years, we …
6th October 2015
The Trans-Pacific Partnership (TPP) agreement which was announced today may not see the light of day for some years. Assuming, however, that it is eventually implemented, it should have large and positive implications for global growth, albeit only over a …
5th October 2015
Many have argued that China’s attempts to prevent its currency from weakening conflict with its efforts to keep domestic monetary conditions loose. But China’s monetary indicators still point to a pick-up in economic growth. What’s more, there is little …
September’s final manufacturing PMIs suggest that the global economy expanded at a moderate pace in Q3. Indeed, although Markit’s global manufacturing PMI fell from 50.7 to 50.6 in September, it is still consistent, on the basis of past form, with world …
1st October 2015
The peak rate of interest in the next tightening cycle is likely to be lower than in the past. Indeed, we estimate that the so-called “neutral rate” is now only around 3% in the US and UK and substantially lower in the euro-zone and Japan. Partly for this …
28th September 2015
The volume of world trade, which has been sluggish all year, fell outright in July. The latest weakness has been concentrated in emerging economies, and Asia in particular, but exports from the US have also been falling in year-on-year terms. … Exporters …
23rd September 2015
Preliminary PMIs published by Markit today have added to concerns that China’s economy is slowing, but the latest activity data, which are more reliable, have been more encouraging. Meanwhile, growth is holding up well, for now, in the euro-zone. … Flash …
Many commentators, including the Bank of England’s Chief Economist, have suggested that the turmoil in emerging markets (EMs) over the last few months is just the latest phase of the global financial crisis that began in 2008. What’s more, as the full …
22nd September 2015
An increase in headline inflation is now “baked in the cake” for most economies. The effects of last year’s oil price slump are set to drop out of the annual comparison in the coming months and fears that a hard landing in China will tip the world economy …
15th September 2015
In the unlikely event that China’s growth rate collapses in the coming years, global growth would decline sharply simply because China accounts for such a large share of the world economy. But the knock-on effects on activity elsewhere would be smaller, …
11th September 2015
Fears about the health of the world economy have centred on China, but the bulk of the slowdown over the past year has actually been due to weaker growth in commodity exporters. The outlook varies by country, but these economies are likely to be less of a …
9th September 2015
We expect developed economies to weather the fallout from China’s August “devaluation” and the subsequent weakness in world equity markets quite well. Activity in the emerging world has slowed further and Brazil and Russia have slipped into recession. …
4th September 2015
The IMF’s call for central bankers to refrain from tightening policy may have fuelled fears that the world is on the brink of a major downturn. We think the picture is not so gloomy. Emerging economies have certainly slowed, but the major developed …
3rd September 2015
Final manufacturing PMIs for August suggest that the pace of global growth has held up fairly well, despite weaker activity in China. … Global Manufacturing PMI …
1st September 2015
The recent panic in global markets has been reflected in a wave of commentary to the effect that monetary policy has lost its power. We disagree. Central banks’ track record on inflation in advanced economies has not been as bad as the headlines might …
The latest monetary data suggest that the pace of growth in the major advanced economies remains solid. Global monetary conditions are likely to remain very loose over the coming years, which in turn should support activity. … Advanced economy credit …
The gyrations in equity and commodity markets have raised expectations that global monetary policy will remain looser for longer than previously expected, but we think that the fallout will actually be fairly modest. The People’s Bank of China may loosen …
28th August 2015
This report is only available as a PDF. Click to download. … Trade rebound suggests world economy is down but not out …
25th August 2015
Among the “flash” business surveys published today, the fall in China’s manufacturing PMI has, understandably, attracted the most headlines. However, surveys for the other major economies suggest that growth elsewhere is holding up fairly well. … Flash …
21st August 2015
Reports that the IMF has decided not to add the renminbi to the SDR basket until September 2016 at the earliest miss two more important points. First, China’s currency may not be added to the basket for several years; and second, SDR “membership” is much …
20th August 2015
At face value the plunge in commodity prices over the last year is consistent with a global recession as severe as that in 2008-09. However, this time it almost certainly is different. The latest commodity slump has mainly been driven by supply-side and …
Fears of a period of widespread deflation look misplaced, in our view, despite the recent fall in oil prices and China’s devaluation. Domestic forces will continue to be the key drivers of inflation. These point to rising price pressures in the US but …
18th August 2015
China’s move to shore up the renminbi suggests that the exchange rate policy changes it announced earlier this week will have little lasting impact on the world economy. Nor will the small step towards a more market-determined exchange rate policy secure …
13th August 2015
The recent run of weak trade data has raised fresh concerns about the health of the global economy. However, the fall in the value of trade over the past year mostly reflects lower commodity prices and the appreciation of the dollar rather than a sharp …
11th August 2015
The declines in the cost of crude oil since May have revived concerns about global growth and deflation risks. However, the falls mainly reflect positive supply-side developments and are also small compared to those that have gone before. The impacts on …
10th August 2015
Global growth rebounded in the second quarter and the latest business surveys suggest that it has picked up further at the beginning of Q3. Growing fears of a hard landing in China have weighed on sentiment and pushed commodity prices lower over the past …
6th August 2015
July’s final manufacturing PMIs suggest that the world economy began the third quarter on a weak note. However, we expect global growth to hold up fairly well over the rest of the year as China’s growth rate stabilises and the US economy accelerates. … …
3rd August 2015
Even though the US Fed is likely to begin raising interest rates in September, global monetary conditions are set to remain ultra-loose over the coming years as a number of other central banks ease policy further. … Conditions to stay loose despite …
31st July 2015
The uneven pace of growth in the developed world is likely to lead to a sharper divergence in monetary policy than most anticipate by the end of 2016. US rates look set to increase further than markets expect, but several central banks elsewhere will …
27th July 2015
Preliminary business surveys suggest that global growth weakened further in July, butwe do not think that the world economy is heading for another major downturn. … Flash PMIs …
24th July 2015
World trade volumes fell sharply in May – the fourth monthly fall during the first five months of the year. This leaves trade growth lagging well behind the growth of GDP. Most of the slowdown has been due to a decline in exports from the emerging world. …
22nd July 2015
Fears of a prolonged period of falling prices in advanced economies have eased over the past few months as both inflation and inflation expectations have rebounded. Nevertheless, the conditions under which deflation can become entrenched, in particular …
20th July 2015
Real wages have typically fallen sharply after a major currency crisis and devaluation but have then begun recovering within a couple of years. The pace at which they have picked up has varied enormously. In some cases, there has also been a sharp rebound …
17th July 2015
Global growth rebounded in the second quarter and should pick up a bit further in the coming two years. In advanced economies, demand will be supported by low oil prices and improving consumer sentiment. Meanwhile, although the euro-zone crisis is far …
16th July 2015
In our view, the debate over whether Greek exit from the euro or the slump in China’s stock market poses the greater threat to the rest of the world is missing the point that neither actually has to be a big deal. But if forced to pick one or the other, …
10th July 2015
The fall in oil prices and the appreciation of the US dollar will cause global imbalances to widen over the coming years. China’s surplus could rise up the political agenda once more while the euro-zone’s growing surplus underlines how weak demand from …
9th July 2015
Beyond its impact on investor sentiment, which we expect to be temporary, the slump in China’s equity market is unlikely to have much effect on the global economy. Indeed, we doubt that it will even have much effect on the macroeconomic outlook for China …
8th July 2015
The global economy is likely to expand at a decent pace in the second half ofthe year, despite escalating tensions in Greece and the recent gyrations in China’s equity market. Business surveys have weakened a bit in the past few months but they, along …
3rd July 2015
Broad measures of the money supply are increasing at a decent pace in the major advanced economies, suggesting at face value that the global economic recovery remains on track. The biggest change over the past twelve months has been in the euro-zone, …
2nd July 2015
Final manufacturing surveys for June, published by Markit today, do not alter our view that global growth recovered in Q2. Admittedly, the global manufacturing PMI edged back down to 51.0, but on past form this is still consistent with world GDP growth of …
1st July 2015
