Country Forecast World

  • ID: 2101439
  • December 2015
  • Region: Global
  • 36 Pages
  • The Economist Intelligence Unit
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The migrant crisis is threatening the Schengen agreement, which enables passport-free movement between many EU countries. The Islamic State (IS) terrorist attacks in Paris will strengthen calls from the right for tougher border controls.

The Economist Intelligence Unit's global GDP growth forecasts are largely unchanged this month. There has been an improvement in some recent Chinese high-frequency data but this was already incorporated into our forecasts. We have made further downward revisions to our Brazil GDP growth forecasts. We now forecast a 3% (-2.8%) contraction in 2015 and a 1.5% (-1%) contraction in 2016.

A strong October US jobs report supports our forecast that the Federal Reserve (Fed, the US central bank) will raise interest rates in December, for the first time since mid-2006. A gradualist approach to monetary tightening will take the main US policy rate to 3.25% by the end of 2020.

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Country Forecast World

Key changes since October 19th

World growth and inflation
A new phase of the global recovery will begin in December
Concerns mount about the slowdown in China
Emerging markets will continue to struggle in 2016-17
The fallout from the oil-price plunge still has some way to run
As emerging markets struggle, the developed world will come to the fore

World growth and inflation: Risk scenarios
Negative scenario-"Grexit" is followed by a euro zone break-up
Negative scenario-Russia's interventions in Ukraine and Syria precede a new "cold war"
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
Negative scenario-Chinese expansionism prompts a clash of arms in the South China Sea
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 grinds to a halt as election campaigns start
The Liberals reach the time to deliver in Canada

Regional summaries: Japan
Price pressures again remain elusive-this time owing to cheap oil
There is little room for manoeuvre on the fiscal front

Regional summaries: Western Europe
Migration backlash is under way
The euro zone records weak third quarter
The ECB stresses its dovish stance
QE will last even longer
Unemployment remains stubbornly high in the periphery
"Grexit" still a high risk
The UK faces a period of potential political turmoil

Regional summaries: Transition economies
Severe recession in Russia holds down regional growth in 2015
An easing of the recession in Russia will return the region to growth in 2016
Holders of Ukrainian bonds agree to a restructuring deal

Regional summaries: Asia and Australasia
Asian policymakers are facing a number of disruptions
Asia needs to diversify its exports away from China
The property market looks the most likely trigger for a hard landing in China
Narendra Modi's star is waning in India
The Australian economy remains bullet-proof, despite lower export prices

Regional summaries: Latin America
2016 is set to be another tough year
Only a mild rise in commodity prices is in prospect
Banking systems are likely to experience stress as interest rates rise

Regional summaries: Middle East & Africa
Troubles in the Middle East and North Africa are spilling over regional borders
Lower oil prices will be a key driver of economic performance
The region's governments face acute policy challenges
The spreading of democracy, but also Islamist extremism
Generally weaker commodity prices bring mixed blessings
The threat of El Niño

Exchange rates
The countertrend rally in emerging-market currencies runs out of steam
Emerging-market currencies are likely to come under further pressure

World trade
Global trade suffers its biggest fall since 2009
Agreement is reached on the TPP
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
Demand growth will be below recent averages in 2016-20
OPEC will reclaim lost market share in 2016-20 as growth in US output ebbs
Commodity prices will stabilise in 2016, after four consecutive years of decline

Global assumptions

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    This product is pre-publication and is due to be released in December 2015. Order now at this special pre-publication price.

  • 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.

    This product is pre-publication and is due to be released in December 2015. Order now at this special pre-publication price.


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