Global economy: Lower growth but not recession - Wells Fargo

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 9, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Analysts from Wells Fargo, lowered global GDP forecasts for 2016 but they don’t think that the global economy is headed for a recession.

    Key Quotes:

    “To judge from our own client meetings, there is growing interest in hearing about whether or not the global economy could slip into recession in 2016. There is no shortage of reasons for concern.”

    “Worries abound about prospects for growth in China even with the adoption of a new growth target range there. The prospect of “Brexit”—the United Kingdom’s potential exit from the European Union—casts a pall upon the outlook for economic growth across Europe. Finally, zero-interest rate policy in many foreign economies is being replaced with a negative interest rate regime. The effectiveness as well as the long-term viability of negative rates has been called into question, most recently by the Bank for International Settlements (BIS).”

    We do not think the global economy is headed for recession this year, although admittedly we have been gradually dialing back our 2016 global GDP forecast, which now stands at 2.8 percent. Global GDP growth of less than 2 percent is generally accepted as a workable guideline for determining global recession.”

    “While all three of these variables (China worries, negative rates and Brexit) are consequential to the global outlook, they are not particularly impactful on the U.S. economy.”
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