Which Economies are Thriving?

The US and China have disappointed so far this year - but the UK economy is growing at an impressive rate and Europe is making positive contributions to global growth

Andy Brunner 15 May, 2014 | 2:46PM

The loss of global growth momentum in the early part of the year was confirmed by disappointing news from the world’s two largest economies, the US and China, that together account for 40% of world output. Much of the softness in US growth was attributable to the severe winter weather while China is contending with both a cyclical and structural slowdown.

Amongst other major economies, continued improvements in the euro area and a strong first quarter GDP report in the UK suggest growth in the developed economies is gaining momentum. Overall though, global first quarter GDP growth is estimated to have slumped to around 2.4% a full point lower than in the last quarter of 2013. Of this, developed markets look set to record growth of around 1.5%, compared to 1.9% in Q4 and 2.9% for emerging markets, compared to 4.9% for the previous three months.

Despite this setback, hope springs eternal that a global recovery is on its way, although headline GDP in Q2 will be compromised by a contraction in the Japanese economy sizeable enough to ensure that attaining above trend global growth will not be realised before the second half. As for the full year, despite UK and euro area forecasts being raised once again, the Q1 downturns in the US and China were sufficient to lower 2014 GDP forecasts for developed economies, emerging markets and the world.

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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