IHS Top-10 Economic Predictions for 2016
December 22, 2015 | IHSEstimated reading time: 10 minutes
Since 2012, world growth has been range-bound between 2.5% and 2.7%. During that time, the growth in the advanced economies has accelerated gradually, while economic activity in emerging markets has decelerated dramatically. IHS expects a slightly better overall performance for the world economy in 2016, with an expected growth rate of around 2.9%. Solid growth in the United States and a slight pickup in the pace of Eurozone and Japanese economic activity, along with an expected easing of recessionary pressures in Brazil and Russia, are among the reasons for this moderately upbeat assessment. In the same vein, low oil prices and more monetary stimulus—in particular, from the European Central Bank (ECB), the People’s Bank of China, and (possibly) the Bank of Japan—will not only support growth, but could also provide the basis for some upside surprises. Unfortunately, there is no shortage of downside risks, including high public- and private-sector debt levels, corporate risk aversion, further weakness in China and other emerging markets, and daunting geopolitical risks. This means that the probability of the global economy being stuck in low gear for another year is still uncomfortably high.
1. US growth will remain solid.
The underlying fundamentals of the US domestic economy remain sound. Consumer spending has been increasing at a rate of around 3% over the past year and is predicted to keep growing at the same pace in 2016. After an off year in 2014, housing activity picked up in 2015 and is likely to remain strong for the next couple of years. Nonresidential capital spending (excluding the energy sector) will also be a positive factor. Last but not least, thanks to the recent congressional budget agreement, government spending will be adding to GDP growth in 2016, after being a negative factor for the past three years. There were three negative influences on the economy in 2015: an inventory cycle, the collapse in energy sector investment, and the impact of a strong dollar and weak global growth. Two of these will ease in the coming year. The inventory correction is likely to be over by the first quarter of 2016, and the sharp drop in energy-related capital spending will probably end in the first half of the year. This means the growth rate of the US economy can be expected to remain in the 2.5–3.0% range in 2016.
2. Europe will keep growing at a modest pace.
After contracting for two years, the Eurozone economy began a modest recovery in 2014, expanding at a 0.9% rate. Growth accelerated a little in 2015 to 1.5%, and is expected to do marginally better in 2016 (1.7%). Four trends are supporting this improved outlook: low energy prices, reduced fiscal headwinds, more monetary stimulus, and a weak euro. The latter two can be expected to support growth even more in 2016. The ECB has indicated its willingness to provide additional stimulus, and IHS expects that the euro will depreciate further. A weakening currency is providing something of a buffer for the Eurozone from weak global growth. While the human toll from the recent terrorist attacks in Paris is incalculably high, the economic impacts will be limited and short-lived. Moreover, in recent months, the risks of Greece leaving the Eurozone have diminished considerably. Meanwhile, UK economic growth will remain steady at 2.4%, and IHS expects that the upcoming referendum will probably not result in the United Kingdom leaving the European Union.
Page 1 of 4
Suggested Items
Sypris Reports Q1 2024 Results; Revenue Up 10%
05/15/2024 | Sypris Solutions Inc.The Company’s first quarter 2024 consolidated revenue increased 10.1% to $35.6 million compared with the prior-year quarter, representing the 11th quarter of double-digit year-over-year growth during the past 12 quarterly periods.
Peters: Casting Compound Perfectly Protects Electronics from Overheating
05/15/2024 | PetersWith ELPECAST® VU 4545/101, Peters has recently added a casting compound to its product portfolio that is characterised by particularly high thermal conductivity.
Avnet to Exhibit at the 2024 Embedded Vision Summit
05/14/2024 | AvnetAvnet’s exhibit plans for the 2024 Embedded Vision Summit include new development kits supporting AI applications.
Kitron: Completed Share Buyback in Connection with Remuneration to the Board Members
05/14/2024 | KitronKitron ASA has completed share buyback in connection with remuneration to the board members. Reference is made to the stock exchange release by Kitron ASA published on 13. May 2024 regarding initiation of a share buyback program.
Real Time with… IPC APEX EXPO 2024: Digitization and Regular Updates of the iNEMI Industry Roadmap
05/14/2024 | Real Time with...IPC APEX EXPORanjan Chatterjee is a board member at iNEMI. In this conversation with Editor Nolan Johnson, Chatterjee discusses the digitization of, and regular updates to, the industry roadmap. The roadmap is a collaborative effort on technologies and standards which is intended to guide CEOs and CTOs in their long-range planning. Ranjan discusses the board's role in shaping the roadmap and the vision for more frequent updates.