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 with other evidence, still suggest that growth will rebound after a disappointing first quarter. The unemployment rate has fallen further in most advanced economies and is approaching levels consistent with “full employment” in the US and UK. Meanwhile, it looks increasingly likely that Greece will be forced out of the euro-zone in the coming months, whatever the outcome of the referendum. But Greece accounts for only 0.3% of world GDP; moreover, contagion should be limited in Europe and negligible further afield. This will leave the US Fed free to begin raising rates before the end of the year, most likely in September.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services