BofAML: Con calma, que la recuperación será lenta (Global Economic Weekly)

Redacción - Martes, 27 de Octubre

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Key takeaways
• We conduct due diligence on our global forecasts and conclude that growth is still likely to pick up modestly next year.
• We leave global growth unchanged in 2015 at 3.1%, but trim 0.2pp in 2016 to 3.4%.
• Brazil is the outlier: we have cut 2016 growth to -3.5% from -1.4%, putting us significantly below consensus.

Global: slow ride, take it easy

We conduct due diligence on our global forecasts and conclude that growth is still likely to pick up modestly next year. We expect 3.1% global growth for 2015, and have trimmed 2016 global growth by 0.2pp to 3.4%.

United States: GDP: trim, crew cut or close shave?

We are cutting our estimate for 3Q GDP growth to 1.2%, lowering 2015 average growth by 0.1pp to 2.4%. We have also cut growth for next year by 0.2pp to 2.5%, as global shocks continue to undercut an otherwise healthy domestic economy.

Europe: still decent, but accelerating no more

In spite of resilient domestic demand, we cut our GDP forecast for 2016 by 0.2pp to 1.7% due to less world growth and the lagged effect of euro re-appreciation. Another layer of ECB accommodation, to come in December, will provide support, but our forecast is dependent on a weaker EUR, itself conditional on Fed lift-off.

China: lower but more balanced growth

We are lowering our real GDP forecasts slightly to 6.9% and 6.6% for 2015 and 2016, respectively, from 7.0% and 6.8% previously. We expect policymakers to adopt more targeted fiscal measures to promote an innovation-led economy, and two more interest rate cuts in the next 12 months. China's growth is lower but has become more balanced. Reforms remain key to maintain potential growth in the long run.

Japan: recovery continues, albeit more slowly than expected

We lower our growth forecasts for 2015 and 2016 to reflect a larger negative contribution from net exports and tardy domestic demand due a rise in the savings rate. But we still believe Japan's recovery will continue through 2016 supported by (1) a healthier corporate sector; (2) fiscal and monetary policies; (3) improved terms of trade; and (4) solid demand for labor.

Emerging Asia: India still offers relative value

India remains relative value. We see slow recovery with growth set to clock 5.5% in FY16 and 6.5% in FY17 in old GDP series. Relative faster growth, however, will see India overtake Brazil and Russia in GDP to become the 2nd largest EM after China. The next trigger will be an urban consumption recovery of 1% of GDP in coming months rather than a turn in the capex cycle.

Emerging EMEA: GDP revision: no tricks or treats

We cut our 2016 GDP for EEMEA commodity importers in line with a G-10 growth revision. Commodity exporters stay unchanged as we already had been highly cautious on them. Heading into 2016 we are still below consensus in most places, while we are about in line on the CE-4.

Latin America: growth mindset

Latin America will likely experience another tough year in 2016 in terms of economic growth. Brazil will suffer another year of sharp economic contraction. In our view, lack of political coordination plus plunging investment and weaker labor markets will likely lead to a 3.5% GDP contraction. Mexico will likely experience a modest acceleration as industrial production in the US picks up.

 

Australia: an inflation outlier

Unlike other central banks, the Reserve Bank of Australia (RBA) has a targeted inflation rate that is fulfilling its mandate. We expect this will be one more factor that sees it unlikely to ease policy further on economic grounds. 

 

See attached report for further information.

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