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Research: Global Growth Expectations

UPDATE ON GLOBAL GROWTH FORECASTS

Country-wise reports
18-Nov-15

India India Growth Forecasts
The 2015 GDP growth outlook for India peaked to a level of 7.1% in August, rising from 6.2% in January. The expectation has now moderated slightly to 7.02. %.

2016 is expected to see higher growth with expectations ranging between 7.4-7.5% since August. Could the consensus be a little too optimistic about growth in 2016? Or is 7.4% a realistic expectation?

China India Growth Forecasts
The China slowdown has led to reduction of growth expectations from 6.96-98% in Jan-Feb to 6.88% in Oct. This is being perceived as a major down turn from its 2014 growth of 7 %.

Notably, the consensus for 2016 seems gloomier by the day with forecasts coming down in steps from 6.78% in Jan to 6.45% by Oct. Watch out for upward adjustments in expectations in case the current outlook is seen to be too pessimistic.

USA USA Growth Forecasts
The US 2015 growth outlook has spiraled down through the year from levels near 3.1% in Jan to 2.62% in Oct.

Prospects for 2016 have also been marked lower, starting from 2.85% in Jan down to 2.65% in Oct, but not as sharply as those for 2015.

The consensus seems more believable in the case of the USA.

Europe Europe Growth Forecasts
Pleasantly, European 2015 growth expectations have increased from near 1.3 in Jan to 1.5% in Oct, even under adverse situations.

Predictions for 2016 have consistently been set approximately 0.3% higher than current year's expectations throughout the year.

We are inclined to go with consensus in the case of Europe as well.

Japan Japan Growth Forecasts
The 2015 growth forecasts for Japan remained close to 1.1% from January until Aug, after which it has taken a sharp fall towards 0.9%.

Almost incredibly, the 2016 expectation looks incongruously rosy with prospects of sustained growth in the range of 1.3-1.4% since the beginning of the year.

Expect growth expectations for both 2015 and 2016 to be downgraded in the coming months.

UK UK Growth Forecasts
UK 2015 growth forecasts peaked at 2.66% in April and have come down steadily to 2.54% in Oct.

Forecasts for 2016 have remained below this year's predictions, ranging between 2.44-2.5%.

These expectations appear reasonably believable and realistic.

Australia Australia Growth Forecasts
The 2015 growth outlook for Australia has steadily decreased from 2.65% in Jan to 2.4% in Oct.

Growth prospects for 2016 were posted higher near 2.9-3% between Jan and May. Expectations have plummeted since, to reach 2.7% in Oct.

That is still 0.3% higher than the expectation for 2015. This might be realistic enough if the Chinese growth outlook for 2016 moves higher in the coming months

Canada UK Growth Forecasts
Canada's 2015 growth expectations have come down sharply since Jan, from 2.45 to 1.83%, in response to continued weakness in commodity prices, especially crude.

Next year's prospects are pegged higher near 2.1%, compared to the 2015 expectation, but have overall been revised down from 2.4% in Jan. There might be room for further downward revision towards 2.0% in the 2016 outlook.

Global Growth Forecasts World
The Global growth outlook was rather upbeat in April-May, with forecasts pegged at 3.35% for 2015 and 3.69% for 2016.

However, expectations were greatly reduced by Oct to touch 3.12% for this year and 3.5% for 2016.

Expect the 2016 forecasts to be revised down towards 3.4% in the next few months.

GDP History and Forecast

Grafting the above forecasts and expectations on the history of achieved GDP growth rates gives us the following chart: Global GDP Growth Rates - Consensus Forecasts
As we can see, consensus forecasts are optimistic about higher growth in 2016 in most big economies, except for China, where growth is projected sharply lower. Is it possible that the consensus is a little too pessimistic about China? The trend may be lower, but perhaps not as low as is being made out?
 
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