An Upturn in Growth Momentum

Market commentators and economists are increasingly expecting improvements in the current year

Andy Brunner 14 January, 2013 | 1:10PM

For some months, leading indicators of the global economy, while not always uniformly positive, have generally trended higher. The JP Morgan Global Composite PMI, for example, bottomed in June and is now at its highest level since last March. The services PMI led the turnround, but in recent months the manufacturing PMI has hauled itself above the 50 level, suggesting a pick-up in the manufacturing sector should be underway. While a straight read across from the PMI figures to global GDP may lack consistency and sometimes be misleading, the PMI’s are certainly indicating some reacceleration of global growth in Q1, despite a possible relatively weak outturn in the US as recent tax changes hit household income.

This upturn in growth momentum has come a little too late to boost Q4 and for all of 2012 global growth will be well below trend at around 3.0%. Hopes are certainly growing that the current year will show a reasonable improvement, despite fiscal austerity programmes and ongoing deleveraging, with growth gradually accelerating as the year progresses.  By year end, many commentators expect Q4 global growth to be moving back up towards an above-trend 4% pace.  The latest estimates for the main economies from the leading investment houses are shown below:

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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