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Geopolitical risks have grabbed the headlines recently and have been cited as a key factor depressing global economic prospects. However, the military conflicts which have attracted most attention pose less of a threat to the world economy than more …
6th October 2014
Although global growth should be a little faster in the second half of the year than the first, it is unlikely to continue rising in the coming quarters. Admittedly, the US looks set for a sustained expansion, even though the Fed will probably begin …
3rd October 2014
Business surveys published today underline that growth in the euro-zone is slowing whereas the US economy remains strong. They also confirm that there has been a sharp slowdown in the UK’s manufacturing sector, and suggest that Japan’s economy may not …
1st October 2014
Although the US Fed is set to announce the end of its asset purchases in late October, global monetary conditions should remain highly accommodative. … Fed ending QE3 but global policy still …
30th September 2014
Rather than being a sign that global growth is faltering, the recent decline in international oil prices mainly reflects improving supply conditions. As such, it should provide a modest boost to global demand. It will also help to keep headline inflation …
29th September 2014
Although the Fed is about to end its asset purchases, quantitative easing in the world as a whole still has a long way to go. The BoJ has already been buying assets on a larger scale than the Fed for the past six months, and it looks increasingly likely …
26th September 2014
There was a slight pick-up in world trade in June and July, which is consistent with our view that global growth recovered in the current quarter. Nonetheless, trade is still expanding relatively slowly by past standards, and no faster than world GDP. … …
25th September 2014
A composite of the flash manufacturing PMIs released so far suggests that the pace of global growthaccelerated in the third quarter, despite more signs of weakness in the euro-zone and Japan. … Global growth set to strengthen in …
24th September 2014
Few analysts will be waking up early this weekend to read the communiqué from the gathering of G20 finance ministers and central bank governors in Cairns. It is likely to cover a lot of familiar ground. No doubt it will be full of good intentions – but …
19th September 2014
ECB President Mario Draghi’s call at Jackson Hole for fiscal policy to play a greater role alongside monetary policy in boosting aggregate demand has prompted some to label the change of tone “Draghi-nomics” – akin to “Abenomics” in Japan. However, while …
18th September 2014
It is twenty years since the last major multilateraltrade agreement was signed and there is no newdeal in sight. What’s more, the regionalTransatlantic and Trans-Pacific trade talks looklikely to drag on for years. One reason for this isthat all these …
17th September 2014
Six years after the onset of the global financial crisis, there is still a threat of deflation. The biggestworry is in the euro-zone, where inflation expectations have slipped and the ECB’s actions stillappear too timid. In addition, the recent pick-up in …
12th September 2014
The recent weakness in the prices of several key industrial commodities – notably oil and iron ore – hasunderstandably fuelled concerns that the world economy is on the cusp of a major downturn. But wewould place greater weight on more direct economic …
From an economic point of view, it might be easier for some other regions with separatist movements to thrive as independent countries than it would be for Scotland. Few of them face the same difficulties over their choice of currency or who would act as …
11th September 2014
Measures of inflation expectations are unanimous in pointing to a growing risk of deflation in the eurozone.Meanwhile, the rise in inflation expectations in Japan suggests that the BoJ’s actions have hadsome success, but also that policymakers there will …
9th September 2014
The US and euro-zone economies have diverged further in the past few months, as growth in the single currency area has stalled but the US recovery has stepped up a gear. Moreover, the gap between the inflation rates in the two economies has also widened. …
5th September 2014
The upward revision to its GDP figures may temporarily boost the UK’s position relative to otheradvanced economies. But other European economies and Japan will eventually make similar revisionsto their data, after which the UK’s comparative performance …
4th September 2014
After narrowing abruptly in 2009, the world’s major current account imbalances rebounded between 2010 and 2012. This raised concerns that there could be a resumption of potentially destabilising capital flows from surplus to deficit countries or that …
The global manufacturing PMI, published by Markit today, suggests that world GDP growth may pickup a bit further in the third quarter after rebounding in the second. But the imbalance between thefast-growing US economy and the euro-zone, where growth has …
2nd September 2014
With the important exception of the US, we expect wage inflation in the major advanced economies to remain subdued in the coming year or two, even as labour markets approach “full employment”. … What are the prospects for wage …
29th August 2014
Last week’s gathering of central bankers at Jackson Hole served to underline the gulf between labour market conditions in the major advanced economies. We suspect that these differences will lead to a sharper divergence in policy rates next year than is …
27th August 2014
The volume of world trade edged up in June, thanks to stronger exports from developing economies. However, exports from advanced economies have continued to be very weak. Forward-looking indicators suggest they may pick up in the coming months, but these …
26th August 2014
Despite the recent run of bad news, particularly from Europe, we do not believe that the world economy is about to slow sharply. There is still ample spare capacity for growth and plenty of room for further policy stimulus where it is needed most. …
25th August 2014
Preliminary business surveys for August, which were published by Markit today, suggest that growthcontinues to be sluggish in Japan and the euro-zone and that China’s economy is slowing. In contrast,the US economy is going from strength to strength. … …
21st August 2014
Global monetary conditions have remained highly accommodative even though theUS Fed is now just a couple of months away from completing QE3. The latest senior loan officer surveys show that the demand for credit rebounded inthe US in the current quarter. …
20th August 2014
The world economy does not appear to be heading for a major slowdown, despite the weak Q2 GDP data from the euro-zone and Japan and some softer monthly indicators from China. The most reliable survey indicators of activity are reassuring and, while …
14th August 2014
The rebound in the US economy in Q2 from its weather-induced downturnshould mean that global growth in the second quarter was much stronger thanin Q1. What’s more, business surveys suggest that activity continued to be fairlystrong in July. However, the …
6th August 2014
There have been calls in recent months for centralbanks to use interest rates in order to dampen assetprice inflation and to contain the risks which somethink are re-emerging in the financial sector.However, we expect central bankers to continueto use …
30th July 2014
Continued very low inflation is likely to have anegative impact on debt ratios in both Japan andthe euro-zone during the coming years. Insouthern euro-zone countries real interest rateswill probably remain high due to the differencebetween inflation rates …
28th July 2014
The latest data underline that global trade volumes remain very weak, even as worldGDP growth has accelerated. Indeed, the volume of world trade fell slightly in May,according to data released today by the CPB Netherlands Bureau for Economics …
24th July 2014
Flash manufacturing PMIs published today indicate that the second-quarter rebounds in the US andChina have continued in July. But the euro-zone’s recovery still looks fragile and Japan is struggling toregain momentum after April’s tax hike. … Global …
The direct effects on the European economy of any sanctions-related disruption to trade with Russiawould not be trivial but the impact via energy markets may be less than many fear. Sentiment could stillbe hit hard at a time when the recovery in the …
22nd July 2014
Although the first US and UK interest rate hikes are now in sight, a combination offactors, including asset purchases by the Fed and BoJ and further policy easing bythe ECB, has caused global bond yields to drift lower over the past few months. Overall, …
17th July 2014
We do not think the global recovery will be derailed by tighter US monetary policy during the comingtwo years. This is because the Fed is unlikely to raise rates aggressively, other central banks are likelyto maintain ultra-loose policy, and emerging …
16th July 2014
Growth in emerging economies has slowed significantly during the past few years and prospects forthe near future are not much better. Nonetheless, our latest forecasts suggest that emerging economiesare still likely to account for the bulk of global …
14th July 2014
Global growth is likely to accelerate a bit during the coming two years while inflation and interest rates should generally remain very low. The US and UK are set for a period of fairly rapid growth. However, the recoveries in most euro-zone countries …
11th July 2014
Six years after the financial crisis, the world is slowly returning to more “normal” conditions which should support a gradual pick-up in growth. However, the legacy of the crisis will hamper the recovery in some countries and structural problems have …
10th July 2014
The US stock market has tended to fare quite well during previous Fed tightening cycles. Although we think its performance in the next cycle will be below average, we still expect it to creep higher. … How will the US stock market handle Fed …
7th July 2014
All the evidence suggests that the US economy has bounced back during the past few months, after its weather-induced slump. Business surveys have remained buoyant, credit growth has accelerated and employment has picked up. In contrast, the euro-zone’s …
4th July 2014
Business surveys point to a reasonably strong expansion of global manufacturing activity in June and are consistent with a rebound in world GDP growth in Q2. However, while manufacturing output continued to expand rapidly in the US and UK, both Japan and …
1st July 2014
In its Annual Report , published at the weekend, the Bank for International Settlements (BIS) argued that “the risk of persistent and self-perpetuating disinflationary pressure is low” and that the focus should now shift towards normalising monetary …
Recent developments suggest that the Bank of England and, perhaps, the US Federal Reserve may make their first rate hikes a little sooner than we had expected a month or two ago. However, global monetary conditions are set to remain exceptionally loose …
27th June 2014
The volume of world trade rose in April, according to data released today by the CPB Netherlands Bureau for Economics Policy Analysis. But it remains sluggish in year-on-year terms and has been weak compared to growth of the world economy. … Underlying …
24th June 2014
Preliminary business surveys for June suggest that global manufacturing activity is expanding at a moderate pace, thanks to a rebound in growth in the US and stabilisation in both China and Japan. However, the euro-zone appears to be missing out on the …
23rd June 2014
The situation in Iraq could play out in many ways. In a “good” scenario, the crisis would ease soon and there could even be some positive fallout for the region. (Our current forecast that Brent will drop back below $100 per barrel within the next 6-12 …
20th June 2014
Market expectations for policy rates have diverged in the past few weeks. The Bank of England suggested that its first rate hike could take place sooner than previously anticipated. Expectations for the Fed’s first rate hike have been brought forward too. …
18th June 2014
We would be wary of assertions that there is a single “magic number” for the oil price beyond which the world economy enters a danger zone. Nonetheless, global growth has been sluggish ever since Brent rose above $100 per barrel, and activity has tended …
17th June 2014
The growing likelihood that the first interest rate hikes will come earlier than previously anticipated will probably have far bigger implications for financial markets than for economic prospects. In both the US and UK policy rates are likely to be …
16th June 2014
There are good reasons to be relaxed about the global economic fall-out from the latest crisis in Iraq, including the possibility that it might actually lead to an improvement in relations between the US and Iran. Nonetheless, geopolitical risks – …
Inflation is likely to remain very low in most advanced economies during the coming year or two, despite a gradual acceleration of economic growth and continued ultra-loose monetary policy. The one partial exception is the US, where we expect core …
12th June 2014
