Credit Suisse: «Global Economic Monitor»: Unexciting but resilient global growth Dienstag, 18. Oktober 2016 - 09:00

In their latest «Global Economic Monitor», Credit Suisse’s economists draw the picture of a world economy on a muted growth trajectory. The good message is that the UK referendum has hardly had any negative impact on economic data so far. However, there is also a less positive message, namely, that major imbalances remain, in particular in form of high public and private sector debt levels. Together with demographic trends they cloud the longer-term outlook of the world economy. The rebalancing of the global economy will therefore likely take several more years, and 2017 may be remembered as another year of relatively unspectacular growth.

The world economy is currently growing at the slowest pace since the Great Recession, and well below the trend of the past three decades. In recent years, the growth in developed economies remained muted despite loose monetary policies and low real interest rates. Not surprisingly, economists have started to question whether monetary policy may have reached the limits of its effectiveness. Conversely, given the continued shortfall in aggregate demand, there are increasing calls for more fiscal stimulus. Yet, Credit Suisse’s economists show that «the big fiscal push» is so far more talk than action. 

Credit Suisse’s economists look, nevertheless, for a mild acceleration in global growth, with the drag from major emerging economies – particularly Brazil and Russia – waning. Developed markets will mostly continue to grow at a trend-like pace and central bank policies in advanced economies continue to diverge, given the different stages of the economic recovery. As major imbalances remain, particularly in form of high and often still rising public and private sector debt stocks, against a backdrop of unfavorable demographic trends, Credit Suisse's economists expect the global economy to still face years of relatively unspectacular growth.

Diverse facets of the global economy in one publication

The current issue of the «Global Economic Monitor» contains amongst others: 

A sober look at economists' forecasts

In the past five years, growth forecasts made at the start of each year were clearly too high and needed to be revised down subsequently. Nevertheless, greater confidence in Credit Suisse economists' «unexciting, but resilient growth» forecast is warranted.
Contact: Oliver Adler, Head of Economic Research
Tel. +41 444 333 09 61

Unexciting but resilient global growth

According to Credit Suisse's economists, the global outlook is for mildly higher global growth in 2017. Headline inflation is likely to rise in many advanced economies due to higher energy prices, but subdued core inflation suggests monetary policy will remain easy.
Contact: Björn Eberhardt, Head of Global Macroeconomics Research
Tel. +41 444 333 57 43

A halting move toward mild helicopter money

For economies stuck in a liquidity trap, Credit Suisse's economists believe that helicopter money can be an effective way of boosting nominal GDP. The introduction of helicopter money will likely be a very gradual and halting one, because it requires difficult political decisions to increase fiscal stimulus.
Contact: Damian Künzi, Senior Economist Global Macro Research
Tel. +41 444 333 32 84

The big fiscal push: more talk than action

While there is a case for fiscal stimulus in many developed economies, it is unlikely to happen on a large scale. Where the need is largest, it is least likely to happen, namely the Eurozone.
Contact: Philipp Waeber, Senior Economist Global Macro Research
Tel. +41 444 333 28 08

The publication «Global Economic Monitor» is available in English and German and is published on a quarterly basis. The next issue will be released in January 2017.