Global Growth Finally Recovers Boosted by US and UK

Following initial rebounds in growth, the 2011 to 2013 period was plagued by all manner of events from natural disasters to the euro crisis and fiscal retrenchment

Andy Brunner 18 February, 2015 | 10:54AM

Many commentators, but by no means all, have become increasingly optimistic that 2015 will be the year that the global economy will at last begin to expand at a faster, more sustainable pace, led by the developed economies. The recovery process has taken far longer to become established and for very good reasons. Following government and central bank supported initial rebounds in growth, the 2011 to 2013 period was plagued by all manner of events from natural disasters to the euro crisis and fiscal retrenchment.

It was also accompanied by policy mistakes and still high levels of debt but, by 2014, the ongoing support from central banks had generated growing business and consumer confidence and indeed, stronger growth in most countries. Unfortunately, from the perspective of the world aggregate, this is coinciding with China’s economic rebalancing and downturns in Russia and Brazil, slowing emerging market headline growth.

Despite the prospect of a period of temporary negative inflation due to the collapse in oil prices, most major central banks believe underlying growth dynamics are much improved and both the Fed and the Bank of England are keen to begin raising interest rates this year. European economic data is also surprising positively while the Bank of England is now specifically targeting 2% growth, with both benefiting from sizeable currency declines.

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Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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