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The latest available data show that world trade, which has been pretty stagnant for the past eighteen months or so, remains depressed. And with the UK’s Brexit vote having further reduced the chances of significant trade liberalisation, trade growth is …
21st July 2016
Having spent the past few months warning that Brexit would cause “severe regional and global damage”, the IMF today all but admitted that it had been bluffing, and acknowledged that economic growth outside Europe would be “little affected”. … IMF changes …
19th July 2016
Fiscal policy in advanced economies is looser this year than last and may well be eased further in the years ahead. In Japan, policy makers are on the cusp of announcing a large supplementary budget, and the UK government has scrapped its fiscal targets …
In our view, the claim that there is too much debt in the world is simplistic. High and rising debt burdens are a serious concern in some countries, including China and Japan. But debt burdens in most advanced economies are under control, while lower …
14th July 2016
The UK referendum result may ultimately lead to the British government pursuing more liberal trade policies with the rest of the world. But progress is likely to be very slow. Meanwhile, the prospect of the UK leaving the EU has extinguished what little …
13th July 2016
We expect China’s economy to slow further next year and the renminbi to continue depreciating. Nonetheless, the risk of a “hard landing” or large currency devaluation is low, so China is unlikely to be the source of a global economic shock any time soon. …
11th July 2016
Developments over the past few days have revived concerns about the consequences of Brexit for theglobal economy. But they have not changed our view that the economic impact outside the UK and ahandful of EU countries will be small. … Brexit is a local, …
7th July 2016
It’s early days but we see no reason to change our view that the global economic fallout from the UK referendum result should be minimal. The UKrecovery will probably falter due to heightened uncertainty about the country's future relations with the EU27, …
5th July 2016
Business surveys published today suggest that global manufacturing growth ticked up in June. Note, however, that almost all the survey responses were received before the UK’s vote to leave the EU. The global manufacturing PMI edged up from 50.0 to 50.4, …
1st July 2016
In the immediate aftermath of the UK referendum, central bankers have concentrated on providing verbal reassurance, but they may soon back their words with action. We think the Bank of England will cut its key policy rate to only 0.25% in July or August …
29th June 2016
The latest monetary data are consistent with a gradual slowdown in advanced economies, but do not point to a collapse in growth. Looking ahead, global central banks are likely to respond to the UK referendum result by leaving policy looser for even …
27th June 2016
Once the dust has settled, the global economic implications of the UK’s vote to leave the European Union are likely to prove much less dramatic than many had suggested during the past few weeks. The adverse effects on the UK itself and the direct impact …
24th June 2016
Preliminary business surveys published today suggest that growth in advanced economies remained stable, but pretty weak, in June. … Flash Manufacturing PMIs …
23rd June 2016
Many measures of inflation expectations are at, or close to, record lows. We do not think this means that the world as a whole is heading for a long period of very low inflation, or even deflation. But the recent data continue to highlight that the risks …
21st June 2016
Following the FOMC meeting earlier this week, we have lowered our forecasts for the fed funds rate at the end of 2017 and 2018. But two key themes remain unchanged: global monetary policy will continue to be very loose, and US monetary policy is likely …
17th June 2016
Although it is far from perfect, the global manufacturing PMI published by Markit seems to be the most reliable timely indicator of the strength of the world economy. It currently suggests that global growth has slowed somewhat, but that it has certainly …
15th June 2016
Global growth fears have re-emerged in recent weeks, but we think that prospects are still reasonably bright. In particular, conditions are in place for a period of steady, if unspectacular, growth in household spending. This should be sufficient to drive …
14th June 2016
Headline inflation will rebound in many countries in the coming months as the effects of the slump in oil prices drop out of the annual comparison. But the era of very low inflation is likely to continue for a long time yet. Underlying price pressures …
9th June 2016
It is often claimed that central bankers are less committed to their inflation targets than they were before the global financial crisis, but a closer look suggests that there has not been a dramatic change. Policymakers are prepared to tolerate inflation …
6th June 2016
The weak US non-farm payrolls data for May and uncertainty ahead of the UK referendum on EU membership, scheduled for 23rd June, may push back the next Fed rate hike until July at the earliest, if not September. Nonetheless, we still think that the US …
3rd June 2016
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
