Global economic forecast - April 2013


Global economic forecast - April 2013

Economic Analysis

29 April 2013

Key messages

  • Global GDP growth has dipped below 2% for the first time since the dark days of 2009. We expect a gradual re-acceleration over the next 3-4 years but the “three-speed” global economy recently outlined by Christine Lagarde remains in place. The IMF’s Managing Director said there are three types of country: those that are doing well (e.g. East Asia and Sub-Saharan Africa); those that are on the mend (e.g. the US and Sweden); and those that still have some distance to travel (e.g. the Eurozone and Japan).
  • We would place the UK economy towards the top end of the “distance to travel” category. Consumer indebtedness has fallen, but remains elevated. Fiscal austerity still has five years to run. And the much-hoped for revival in exports is yet to materialise – the trade deficit has barely budged over the past five years despite a 20% fall in the value of sterling. On our forecast, annual GDP growth averages just 1% over the next two years – better than the Eurozone (0%) and Japan (0.7%), but slower than the US (2%) and of course way behind China (8%).
  • We have entered a new era for monetary policy. The US started giving forward guidance last year, promising to keep rates on hold until the unemployment rate fell below 6.5%. And Japan recently announced bold steps to avoid a third ‘lost decade’. If recoveries continue to disappoint in these, or other developed countries like the UK, then we would expect to see even more creative and unusual monetary policies come to the fore, given the inability of highly-indebted governments to stimulate their economies. The challenge facing policy-makers is most daunting in the Eurozone. The Cypriot bailout has undermined progress towards a banking union. And the Italian election has underlined the political divergences within countries with regard to dealing with the ongoing crisis.

Download the complete forecast
global-economic-forecast-april-2013.pdf (PDF 108KB)

Tagged

Latest news

Women and millennials help drive £17bn+ franchise sector to record levels

New research from NatWest and the British Franchise Association (bfa) highlights changes and profitability in the sector.

Winners announced for Skills & Opportunities Fund

52 winning organisations have been announced for round two of the 2018 Skills & Opportunities Fund.

RBS Multicultural Network meets Eric Holder, 82nd US Attorney General

Simon McNamara, RBS Chief Administrative Officer and Executive Sponsor of the RBS Multicultural Network, recently hosted an event in discussion with Eric Holder, the first black US Attorney General. They discussed career, ethnicity, diversity and even a little bit of politics. At the event, Eric Holder shared his wisdom and experience with attendees from the RBS Executive committee and RBS Multicultural Network. Simon McNamara blogs about his experience meeting Eric, a BAME role model, and why diversity is so important to RBS.

Set Tab for lightbox