Since 2012, world growth has been range-bound between 2.5% and
2.7%. During that time, the growth in the advanced economies has
accelerated gradually, while economic activity in emerging markets has
decelerated dramatically. IHS expects a slightly better overall
performance for the world economy in 2016, with an expected growth rate
of around 2.9%. Solid growth in the United States and a slight pickup in
the pace of Eurozone and Japanese economic activity, along with an
expected easing of recessionary pressures in Brazil and Russia, are
among the reasons for this moderately upbeat assessment. In the same
vein, low oil prices and more monetary stimulus—in particular, from the
European Central Bank (ECB), the People’s Bank of China, and (possibly)
the Bank of Japan—will not only support growth, but could also provide
the basis for some upside surprises. Unfortunately, there is no shortage
of downside risks, including high public- and private-sector debt
levels, corporate risk aversion, further weakness in China and other
emerging markets, and daunting geopolitical risks. This means that the
probability of the global economy being stuck in low gear for another
year is still uncomfortably high.
- 1. US growth will remain solid.
- 2. Europe will keep growing at a modest pace.
- 3. The Japanese economy will continue to limp along.
- 4. China’s economic activity will decelerate even more.
- 5. Some emerging markets will remain in recession, while growth elsewhere will disappoint.
- 6. Commodity prices will reach a trough.
- 7. Any rise in inflation will be modest.
- 8. The Federal Reserve and the Bank of England will raise interest rates a little, while other central banks will either be on hold or ease more.
- 9. The US dollar will rise further.
- 10. The risks buffeting the global economy will likely not derail it. As highlighted above, there is no shortage of risks facing the global economy.
- original sources
