Country Forecast World

  • ID: 2101439
  • October 2015
  • Region: Global
  • 35 Pages
  • The Economist Intelligence Unit
1 of 3

Some poor high-frequency data from China, coupled with the bursting of its stockmarket bubble and a shift in its exchange-rate policy, have unsettled financial markets. The Economist Intelligence Unit maintains the view that China will avoid a hard landing, although we assign a 30% chance to the opposite outcome over the next five years. We forecast that China will grow by 6.8% in 2015, slowing to 6.5% in 2016 and to 5.2% by 2019.

The slowdown and shifting composition of the drivers of economic growth in China will provide little support for commodity markets. The price of oil and most commodity prices will remain subdued in 2016, although cutbacks in supply will prevent further falls and lead to modest rises in some markets.

We expect the Federal Reserve (the US central bank) to adopt a gradualist approach to monetary tightening. This should ease pressures on emerging-market currencies, provided their economic performance stabilises.

Note: Product cover images may vary from those shown
2 of 3

Country Forecast World

Key changes since August 17th

World growth and inflation
Concerns mount about the slowdown in China
Emerging markets will continue to struggle in 2015-16
Volatility in capital markets seems likely; a full-blown crisis much less so
Oil prices will not bounce back to pre-2014 levels
Europe is in a stronger position to withstand Grexit than in 2012-13
The fundamentals of the US economy remain sound
Will developed markets and emerging markets continue to diverge?

World growth and inflation: Risk scenarios
Negative scenario-"Grexit" is followed by a euro zone break-up
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-China experiences a sharp economic slowdown
Positive scenario-A sustained decline in oil prices provides a global economic fillip
Negative scenario-The rising threat of jihadi terrorism destabilises the global economy
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
Positive scenario-Grexit prompts a euro zone economic revival
Negative scenario-A collapse in investment in the oil sector prompts a future oil price shock

Regional summaries: North America
Economic growth below 3% is the new normal for the US
Janet Yellen readies markets for the first policy-rate rise
Policymaking will grind to a halt as election campaigns start
Canada will experience domestic turmoil because of cheaper oil

Regional summaries: Japan
Shinzo Abe's policy agenda is moving forwards in some areas
Key targets of Abenomics remain elusive
There is little room for manoeuvre on the fiscal and monetary fronts

Regional summaries: Western Europe
Asylum issue will not go away
Weak second-quarter euro zone numbers as investment struggles
ECB stresses its dovish stance
Unemployment remains stubbornly high in the periphery
"Grexit" still a high risk
The UK election result has far-reaching consequences

Regional summaries: Transition economies
Holders of Ukrainian bonds agree to a restructuring deal

Regional summaries: Asia and Australasia (excl Japan)
Concerns grow about Chinese growth prospects

Regional summaries: Latin America
The malaise in Brazil will temper Latin American growth
China's stockmarket crash could push commodity prices down further
How much of the shift in US monetary policy has been priced in?
Banking systems are likely to experience stress as interest rates rise

Regional summaries: Middle East & Africa
The Middle East and North Africa remains beset by political instability
Many of the region's governments will grapple with lower oil revenue
Iran's nuclear deal will be a game-changer
The spreading of democracy, but also Islamist extremism
Softening commodity prices are one of several challenges for policymakers
Growth rates are slowing, with only moderate prospects for improvement

Exchange rates
The theme of broad-based US-dollar strength will continue
Emerging-market currencies are likely to come under further pressure

World trade
Structural changes in international trade will ease global imbalances
Global trade suffers its biggest fall since 2009
Faltering progress on major regional trade deals
Medium-term trade growth will not return to pre-crisis levels
Structural changes in international trade will ease global imbalances

Commodity prices
Oil prices will recover only slowly from their collapse in 2015
Some of the drivers of rising demand in 2015 will fade in 2016
Despite a fall in output in 2016, US shale will weather the price slump
OPEC production will continue to rise
Commodity prices will stabilise in 2016, after four consecutive years of decline

Global assumptions

Note: Product cover images may vary from those shown
3 of 3
Note: Product cover images may vary from those shown


  • Quick Help: This country profile will be emailed to you The country profile is sent in PDF format. This is a single user license, allowing one specific user access to the product.

  • Quick Help: The report will be emailed to you. The report is sent in PDF format. This is a single user license, allowing one specific user access to the product.


If you have a more general question about our products please try our



Our Clients

  • Western Union Company
  • Wells Fargo & Company
  • Credit Suisse Group
  • Royal Bank of Scotland PLC.
  • Deutsche Bank AG
  • Barclays Bank PLC.