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‘Global Growth Now Fraying at the Edges’

Sunday, February 7, 2016 11:11
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(Before It's News)

Gavyn Davies:

Global growth now fraying at the edges: The growth rate in global activity remains broadly unchanged at around 2.8 per cent, little different from the rates recorded since mid 2015. However, there has been a further slowdown in economic activity in the advanced economies (AEs), which are growing at only 1.2 per cent, down from 1.6 percent late last year.

For the first time since 2012, the growth rate in the AEs is clearly below trend… Furthermore, the US nowcast is now at its lowest since the recovery began in 2009. … Until now, however, this drag on global activity has been offset by fairly robust growth rates in the Eurozone. Worryingly, Eurozone growth has now sagged to about 1.3 percent. …

This development reduces our confidence that the bout of American weakness in the industrial sector will be easily shrugged off by the global economy. Significant downgrades to consensus forecasts for US growth in 2016 now seem very likely. Although the risk of an outright recession still seems contained, the Fed must surely sit up and pay attention to this.

We judge that there has been little change in overall activity in the emerging markets this month. The China nowcast has moved down to the lower end of its recent range, but there are clear signs of stabilisation in Brazil – by far the weakest of the G20 economies last year – and an up-tick in growth in India. …



Source: http://economistsview.typepad.com/economistsview/2016/02/global-growth-now-fraying-at-the-edges.html

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