Global growth is expected to remain fragile in 2016. Global trade and manufacturing activity will likely struggle, and additional growth scares should be expected. This will play out within the global macro economic themes of low inflation and global policy divergence. Across the developed world, deflation scares of 2015 are expected to give way to an environment of low, but no longer falling, inflation. The bulk of the oil price plunge has likely already occurred and the gradual fall in unemployment should stabilise or increase wage inflation, ensuring that deflation is less of a risk. The US Fed is expected to continue raising interest rates whilst other central banks continue stimulus. The US economy is expected to remain resilient and there would be continued expansion in Europe and Japan.
Continue reading below:Newell Palmer - Monthly Economic Notes January 2016
After months of uncertainty, investors are positioning themselves for the monetary policies of the US Federal Reserve and European Central Bank (ECB) to diverge. Top US central bank officials have been saying for months that they believed the US economic recovery was nearly robust enough to withstand an increase in the benchmark rate from nearly zero. In contrast, the head of the ECB has indicated that the ECB is about to inject more monetary stimulus into the Eurozone economy.
Continue reading below:Newell Palmer - Monthly Economic Notes December 2016