Global Growth Disappointment to Continue - RBS
The views of RBS economists on global economic matters have been largely vindicated by the incoming data in recent weeks.
“Global growth is decelerating and undershooting consensus forecasts as we anticipated. There have, nevertheless, been some noteworthy nuances to that global picture. The US and Europe have been generating negative growth surprises. Japan and the emerging bloc in contrast have been generating a few positive growth surprises.
We are still expecting the incoming data for global growth and inflation to disappoint. That’s in tune with our global growth forecast of 2.7% for this year which is still a good quarter point below the published Bloomberg consensus. The risks to our view moreover remain tilted to the downside.
Three generic features of the global backdrop remain notable and concerning. These are in many respects feeding off each other and generating some negative feedback loops for the world economy. The first of these concerns the extreme uncertainty that is plaguing the world economy right now. The second is the related weakness of capital spending growth in a number of developed and developing economies and some parallel fragility in world trade growth. And the final issue is the lingering lack of potency in monetary policy which is also linked to those aforementioned factors.
Breaking these negative feedback loops will remain extraordinarily challenging in our view in the absence of more concerted efforts to instigate structural reforms and implement more activist fiscal policy programmes. Central Bank officials are of course acutely aware of this. But they will surely remain powerless to redress the imbalance until other policymakers navigate their way through some formidable political challenges in the weeks and months ahead.”