Global Health Check: Taking the Economy's Temperature

GLOBAL INVESTMENT STRATEGY: Global growth is getting back on track but don't pop the champagne corks just yet

Andy Brunner 10 April, 2013 | 5:51PM

Global Economic Growth

Q1 headline figures will show a substantial recovery in global GDP growth following the very weak end to last year, when Q4 developed-economy GDP contracted at a 0.5% seasonally-adjusted annualised rate (s.a.a.r.). Principally as a result of a substantial US rebound, the developed countries are expected to have grown at close to a 2.0% s.a.a.r. in Q1, the fastest pace for some considerable time.

Before popping the champagne corks, however, it should be recognised that just as Q4’s contraction significantly overstated the weakness in underlying conditions, so Q1’s growth rate will overstate a pace of a recovery that is certainly not yet sustainable. Indeed, more recent economic data suggest a weaker trend for global industrial production after strong growth either side of the turn of the year. All of this combines to indicate that Q1 global growth will accelerate to around 3.25%, from 2.5% in the prior quarter, to be followed by a slightly slower pace in Q2.

Hopes of an improvement in the second half and a stronger upturn next year remain intact. Where changed, however, forecasts have generally been lowered in the table below which shows the latest yearly estimates from a number of leading investment houses (click table to enlarge):

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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