UK Economy Weakens But Fears of a Global Recession Lessen

Economic growth has remained below its long-term trend of around 3.5% since 2014. But the economy has picked up thanks to oil prices, the renminbi, and central bank policy

Francisco Torralba, Ph.D. 9 May, 2016 | 12:04AM
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Since the last time I was writing this commentary markets have relaxed about the possibility of a global downturn. Financial conditions have eased in developed markets, and business sentiment has recovered shortly after. Economic activity itself has improved-although not enough, in my opinion, to justify to market rebound. Real-time indicators picked up during March in the U.S., China, emerging markets and, to a lesser extent, the eurozone.

Four of the latest five U.S. downturns have been followed by a global recession

In contrast, the economy seems to be getting weaker in the U.K. and Japan. Financial markets have lived in a heightened state of alert for the last two years. Economic growth has remained below its long-term trend of around 3.5% since 2014. So when, on at least three occasions, activity growth has dipped for a few weeks, fear of a global recession has spiked.

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About Author

Francisco Torralba, Ph.D.  Francisco Torralba is an Economist for Morningstar Investment Management.