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Country Forecast World Product Image

Country Forecast World

  • ID: 2101439
  • June 2015
  • Region: Global
  • 40 Pages
  • The Economist Intelligence Unit

The euro zone economy grew by 0.4% in the first quarter, helped by a strong performance by France (0.6%), which had been languishing. Italy returned to positive growth (0.3%) but Germany came in below expectations at 0.3%. The Economist Intelligence Unit has shaded up its euro zone growth forecasts, to 1.5% in 2015 and 1.7% in 2016. The region is benefiting from lower oil prices, the European Central Bank's quantitative easing programme and a weakening of the euro over the past 12 months.

Following a downturn in the first quarter, largely due to poor weather and transitory factors, we have cut our US 2015 growth forecast to 2.4% (3.2% previously).

China registered 7% year-on-year growth in the first quarter, the lowest since the Great Recession of 2009. In the light of the continued soft tone of high-frequency data, we have again cut our 2015 China growth forecast, to 6.8%.

Note: Product cover images may vary from those shown

Country Forecast World

Key changes since April 13th

World growth and inflation
Divergent monetary policy is increasing the risk of financial instability
Some emerging markets will face volatility in late 2015
The US continues to lead the global economy
The European economy is improving
The price of oil will rise during the second half of 2015
Energy exporters will lose half a trillion dollars in income this year
Can the US continue to prosper while the rest of the world struggles?

World growth and inflation: Risk scenarios
Negative scenario-"Grexit" creates fears of a euro zone break-up
Negative scenario-A commodity price slump and investment crunch in China entrench the emerging-market slowdown
Positive scenario-A sustained decline in oil prices provides a global economic fillip
Negative scenario-Russia's intervention in Ukraine escalates, leading to cold war-era tensions
Negative scenario-Global monetary policy divergence leads to extreme currency volatility
Negative scenario-The deteriorating security situation in the Middle East threatens global economic stability
Positive scenario-A rapid recovery in parts of the OECD drives global growth higher
Negative scenario-The US economy stumbles in the face of monetary tightening and political dysfunction
Negative scenario-Economic upheaval leads to widespread social and political unrest
Negative scenario-A collapse in investment in the oil sector prompts a future oil price shock

Regional summaries: North America
The US will bounce back after the first-quarter contraction
Janet Yellen readies markets for first interest-rate rise
Barack Obama will embrace the relative freedom of his last year as president
Canada will experience domestic turmoil because of cheaper oil

Regional summaries: Japan
The economy is continuing to underperform
The weak fiscal position will impinge on policymaking
The BOJ will keep monetary policy very loose, despite signs of dissent
Economic growth will return in 2015

Regional summaries: Western Europe
A strong first quarter underscores a brighter outlook
Unemployment remains stubbornly high
Will the euro zone stay intact?
A momentous result with far-reaching consequences

Regional summaries: Transition economies
The nature of German growth will mute its positive impact on the region
Poland and Hungary cut rates as the ECB launches QE
The prospect of an end to bank deleveraging in 2015
Maxidevaluations in the CIS

Regional summaries: Asia and Australasia (excl Japan)
Asia will grow steadily, assisted by low interest rates and inflation
A slowdown in Chinese growth will be disruptive
Asia is well prepared to cope with capital volatility

Regional summaries: Latin America
Recession in Brazil weighs on the region's growth prospects in 2015
Lower commodity prices will compound an uncertain outlook for capital flows
Banking systems are likely to experience stress as interest rates rise

Regional summaries: Middle East & Africa
Lower oil prices will be felt across the Middle East and North Africa
Political unrest will remain a feature across the region
A comprehensive nuclear deal would be a game-changer for Iran and the region
Spreading democracy will aid, but not guarantee, political stability in Africa
A range of other challenges abound
African countries are becoming more dependent on global capital

Exchange rates
We expect US-dollar strength to resume
Emerging-market currencies are likely to come under renewed pressure

World trade
Global trade begins the year slowly
Russia and EU dispute will hurt trade and growth
Medium-term trade growth will not return to pre-crisis levels
The stand-off ends over the limited WTO trade deal
The focus turns to major regional trade deals
Structural changes in international trade will ease global imbalances

Commodity prices
Questions remain around US shale producers' resilience
OPEC producers appear determined to maintain market share
Lower prices will provide only modest support to demand

Global assumptions

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Note: Product cover images may vary from those shown

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