Global Economy Expected to Accelerate in Second Half

GLOBAL INVESTMENT STRATEGY: Andy Brunner checks the temperature of the leading global economies

Andy Brunner 13 May, 2013 | 6:00PM
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The Global Economy

With Q1 GDP reports from the world’s two largest economies, the US and China, failing to reach expectations, together with a second month of generally disappointing forward-looking PMIs, it is understandable that the economic debate has gravitated towards fears of another spring swoon for the global economy. While acknowledging downside risks to quarterly global growth forecasts, in general, commentators expect a strong recovery in the developing economies to boost Q2 growth to around a 3.4% per annum pace from 2¾% in Q1. As for the balance of the year, a continuing improvement in financial conditions should set the stage for a second half acceleration to at least trend growth. The table below shows the latest consensus estimates from a number of the leading investment houses.

The US Economy

Although headline US Q1 GDP grew at a 2.5% quarter-on-quarter rate, compared to just 0.4% in Q4, adjusting for temporary distortions and one-off items revealed a more pedestrian advance with final domestic demand growing at a 1.9% average pace over the past two quarters. To a large extent, this modest growth rate reflects the scale of government cutbacks that have averaged -5.7% over Q4 and Q1, whereas private sector domestic demand (consumer and corporate spending and housing) grew at a very decent 3.5% clip.

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK