Economic Research presents its Q2 2018 Global Economic Outlook and regional updates (North America, Latin America, Asia, Africa, Eastern and Western Europe)
1. World GDP growth remains on a solid footing albeit being less synchronized Three shocks since Q1: stronger than expected yields, higher commodity prices and higher (geo)political risk
- The growth peak seems behind us
- Diverging growth engines as:
- Political risk is expected to persist
- The Fed will continue pushing global rates higher
- Effects from old fiscal stimulus measures start to fade away (China, Japan, US) but new one kicks-in (Europe)
- Multi-speed normalization of monetary policies will diverge the trend in financial conditions
- FDI flows soften amid higher protectionism
2. The markets are likely to increasingly sanction the weakest in the loop: Stress for currencies in the some of the vulnerable emerging markets: Turkey and Argentina
3. Brent oil prices at 72 USD/bbl in 2018 and 69 USD/bbl in 2019. Spot price mid-June 2018 at 75 USD/bbl.
4. A temporary surge in inflation expected in Q3 18 on the back of higher oil prices and depreciating currencies.
5. USD to further appreciate in the next 6 months (+4.5%). EUR/USD: 1.10 at end-2018; 1.17 at end-2019.
