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1 Apr 2015
Global growth forecast revised – Westpac
FXStreet (Barcelona) - Justin Smirk, Senior Economist at Westpac, explains the factors behind revising the global growth forecast lower, with Westpac now expecting 2015 growth to be at 3.4%yoy, lowered from previously expected 3.7%yoy.
Key Quotes
“The key themes to emerge so far in 2015 have been; further monetary easing (20 central banks so far and counting), plus the stark deflationary pressures in the traded sector, which has been most evident in raw materials and intermediate goods.”
“Excess capacity in metals and energy extraction, and the heavy industrial and consumer durable manufacturing sectors, are contributing to ongoing downward pressure on prices.”
“This has seen the emergence of a consensus for a US-Centric improvement in global growth in 2015 to which Japan will provide a positive contribution and, to a lesser extent, Europe. In part, the reduction in global fiscal drag and the significant decline in oil prices are seen as net positives. There is, however, an expectation that the current slowdown in China could deepen in 2015.”
“We generally concur with this view except for China where we think that any further slowdown will be modest. Through 2015 and into 2016, China is set to benefit from further policy stimulus and a boost to external demand largely courtesy of the US consumer.”
“Structural change and rising optimism will also underpin a considerable lift in India.”
“We have revised our global growth forecasts, with 2015 now 3.4%yr from 3.7%yr and 4.1% in 2016 from 4.4%yr.”
“There have also been modest revisions to US and European estimates but a key change has been the downgrading of the Newly Industrialised Economies of Korea, Hong Kong, Taiwan and Singapore from 4.0% and 4.9% in 2015 and 2016 respectively to 3.4% and 4.6%.”
Key Quotes
“The key themes to emerge so far in 2015 have been; further monetary easing (20 central banks so far and counting), plus the stark deflationary pressures in the traded sector, which has been most evident in raw materials and intermediate goods.”
“Excess capacity in metals and energy extraction, and the heavy industrial and consumer durable manufacturing sectors, are contributing to ongoing downward pressure on prices.”
“This has seen the emergence of a consensus for a US-Centric improvement in global growth in 2015 to which Japan will provide a positive contribution and, to a lesser extent, Europe. In part, the reduction in global fiscal drag and the significant decline in oil prices are seen as net positives. There is, however, an expectation that the current slowdown in China could deepen in 2015.”
“We generally concur with this view except for China where we think that any further slowdown will be modest. Through 2015 and into 2016, China is set to benefit from further policy stimulus and a boost to external demand largely courtesy of the US consumer.”
“Structural change and rising optimism will also underpin a considerable lift in India.”
“We have revised our global growth forecasts, with 2015 now 3.4%yr from 3.7%yr and 4.1% in 2016 from 4.4%yr.”
“There have also been modest revisions to US and European estimates but a key change has been the downgrading of the Newly Industrialised Economies of Korea, Hong Kong, Taiwan and Singapore from 4.0% and 4.9% in 2015 and 2016 respectively to 3.4% and 4.6%.”