Schroders Economic Infographic Mar 2015 · Schroders Economic Infographic Mar 2015 Marketing...
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Macro risks Probability analysis of future scenarios Advanced economies grow in response to loose monetary policy Economy falls into a slump Financial system and demand collapse in China Oil price falls to, and stays at, $30 per barrel Growth in developed markets offsets lower growth in emerging markets Global activity grinds structurally lower Europe is hit by disruption to energy supply To head off a political backlash Acceleration in advanced economies offset by weaker growth in emerging markets Global growth Schroders Economic Infographic Mar 2015 Marketing material Global growth Europe BRICs REGION 2014 2015 USA 2.4% 3.2% 1.1% 1.3% EUROZONE • Inflation in the advanced world is expected to record its lowest rate for five years in 2015, but picks up in 2016 as the impact of lower energy prices fades. • We do not expect sustained deflation in the eurozone or in the wider global economy. In the US we expect the Fed funds rate to rise to 1.25% by end 2015 and then peak at 2.5% in 2016. Decline in oil prices favours advanced over emerging economies Emerging economies Advanced economies 2016 1.6% 2015 1.3% Recovery resumes as political risk subsides UK - growth expected to slow to 2% in 2016 on back of weaker investment and fiscal tightening that will result after May’s election A lower oil price Ongoing euro weakness Increased banking activity Lower interest rates Region appeared to shake off Ukraine/Russia concerns Greek crisis fading G 7 B o o m E Z d e f l a t i o n a r y s p i r a l R e fla tio n a ry R e fla tio n a ry C h i n a h a r d l a n d i n g O i l l o w e r f o r l o n g e r O th e r B a s e lin e R u s s ia n r u m b l e S e c u l a r s t a g n a ti o n E Z a b a n d o n s a u s t e r i t y 3% 4% 4% 6% 4% 6% 3% 65% 5% D e f l a t i o n a r y S ta gfla tio n a r y D e fl a ti o n a r y Worries: Fed rate rise > hike > trigger EM corporate defaults & economic slowdown Oil producers Net oil consumers Feeds through quicker as government does not attempt to fix the price through subsidies BRAZIL INDIA CHINA Growth outlook: unchanged Growth outlook: downgraded Growth outlook: downgraded Growth outlook: unchanged RUSSIA • Weaker oil price hits growth through reduced exports and fiscal support • Inflation shooting up thanks to currency weakness and sanctions • Change in GDP calculation - investment growth remains weak and reforms are needed • Cheap oil + overcapacity + slower growth = lower inflation • Further monetary easing expected • Petrobras scandal, fiscal consolidation, and threat of electricity rationing • One-off impact of electricity tariff and currency weakness • Further rate hikes from the central bank, with potential cuts in Q3-Q4 as growth sours 2015 2016 6.8% 6.5% 2015 2016 2015 2016 2015 2016 -0.6% 0.9% -4.9% -0.4% 7.5% 7.8% 4.2% 3.7% EMERGING MARKETS 0.0% 1.6% JAPAN
Transcript of Schroders Economic Infographic Mar 2015 · Schroders Economic Infographic Mar 2015 Marketing...
Macro risks
Probability analysis of future scenariosAdvanced economies grow
in response to loose monetary policy
Economy falls into a slump
Financial system
and demand collapse in China
Oil price falls to, and stays at, $30 per barrel
Growth indeveloped marketsoffsets lower growth in emergingmarkets
Global activity grinds structurally lower
Europe is hit by disruption to energy supply
To head off a political backlash
Acceleration in advanced economies offset by weaker growth in emerging marketsGlobal growth
Schroders Economic Infographic Mar 2015 Marketing material
Global growth Europe
BRICs
REGION 2014 2015
USA 2.4% 3.2%
1.1% 1.3%EUROZONE
• Inflation in the advanced world is expected to record its lowest rate for five years in 2015, but picks up in 2016 as the impact of lower energy prices fades. • We do not expect sustained deflation in the eurozone or in the wider global economy.
In the US we expect the Fed funds rate to rise to 1.25% by end 2015 and then peak at 2.5% in 2016.
Decline in oil prices favours advanced over
emerging economies
Emergingeconomies
Advancedeconomies
20161.6%
20151.3%
Recovery resumes as political risk subsides
UK - growth expected to slow to 2% in 2016 on back of weaker investment and fiscal tightening that will result after May’s election
A lower oil price
Ongoing euroweakness
Increasedbankingactivity
Lower interestrates
Regionappeared to
shake off Ukraine/Russia
concerns
Greek crisisfading
G7 Boom
EZ deflationary spiral
Reflationary Reflationary
China hard landing
Oil lo
wer
for l
onge
r Other
BaselineRussian ru
mble
Secu
lar st
agna
tio
nEZ abandons austerity
3% 4%
4%
6%4%
6%
3%
65%
5% Deflationary
Stagflatio
nary
Defla
tiona
ry
Worries: Fed rate rise > hike > trigger EM corporate defaults & economic slowdown
Oil producers Net oil consumers Feeds through quicker as
government does not attempt to fix the price through subsidies
BRAZIL INDIACHINA Growth outlook: unchanged Growth outlook: downgraded Growth outlook: downgraded Growth outlook: unchangedRUSSIA
• Weaker oil price hits growth through reduced exports and fiscal support• Inflation shooting up thanks to currency weakness and sanctions
• Change in GDP calculation - investment growth remains weak and reforms are needed
• Cheap oil + overcapacity + slower growth = lower inflation• Further monetary easing expected
• Petrobras scandal, fiscal consolidation, and threat of electricity rationing• One-off impact of electricity tariff and currency weakness• Further rate hikes from the central bank, with potential cuts in Q3-Q4 as growth sours
2015 2016
6.8% 6.5%
2015 2016 2015 2016 2015 2016
-0.6% 0.9% -4.9% -0.4% 7.5% 7.8%
4.2% 3.7%EMERGINGMARKETS
0.0% 1.6%JAPAN
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• Weaker oil price hits growth through reduced exports and fiscal support• Inflation shooting up thanks to currency weakness and sanctions
