CITI: Here's What The 36 Most Important Economies Will Do In The Next 4 Years

There’s a big divergence going on in the global economy right now.

Growth in the US is picking up as Europe, Japan, and the emerging markets slow.

In its latest monthly Global Economic Outlook and Strategy report, Citi’s Willem Buiter and his team downgrade the firm’s expectation for global growth after “notable downgrades” to several emerging markets including Brazil, China and Russia.

“Our global growth forecasts continue to drift down, and we are cutting 0.1 per cent off our 2015 forecast this month, and now look for global GDP growth of 2.8% this year and 3.3% for 2015 (at current exchange rates),” Buiter wrote. “This is the second consecutive monthly downgrade to our 2015 growth forecast, while in total we have cut our 2014 forecast by 0.5 per cent (from 3.3% to 2.8%) since January.”

Buiter’s 52-page note offers commentary on every major economy covered by Citi’s army of economists. We highlight a few of the viewpoints for 36 major economies in the Americas, Europe, Asia-Pacific, and Africa. We also include GDP growth forecasts through 2018.

The US will see solid growth in the next few quarters.

GDP Growth Forecast

  • 2014: +2.3%
  • 2015: +3.3%
  • 2016: +3.2%
  • 2017: +2.7%
  • 2018: +2.2%

'Improving consumer and business fundamentals, along with supportive financial conditions (including a massive rise in wealth) are pointing to a solid 3 per cent (or better) growth in the next few quarters,' writes Citi's Peter D'Antonio. 'The rebound in growth, especially in private domestic demand, should help drive the unemployment rate below 6 per cent later this year.'

Source: Citi

Japan's central bank will implement more easing measures.

GDP Growth Forecast

  • 2014: +0.9%
  • 2015: +0.6%
  • 2016: +1.2%
  • 2017: +1.2%
  • 2018: +1.0%

'We expect the BoJ will implement additional easing measures during the period between late October and January 2015,' write Citi's Kiichi Murashima and Naoki Iizuka. 'Recent sharp yen depreciation, along with the resultant rally in equity markets, has probably reduced the possibility of early easing (say, in late October). We believe that fresh easing in January 2015 -- after PM Abe's official decision to implement the tax hike -- is most likely now.

Source: Citi

Germany's consumer confidence is weakening.

GDP Growth Forecast

  • 2014: +1.5%
  • 2015: +1.8%
  • 2016: +2.1%
  • 2017: +1.9%
  • 2018: +1.8%

'German sentiment indicators have continued to weaken and consumer confidence is now also weakening (from a very high level) in response to a string of weak data and external risks,' writes Citi's Ebrahim Rahbari. 'We currently expect 0.5% QQ Q3 growth, but acknowledge that the strong rebounds in industrial production and exports in July point to the possibility of a higher figure.'

Source: Citi

France's new economy minister will continue old reforms.

GDP Growth Forecast

  • 2014: +0.4%
  • 2015: +1.0%
  • 2016: +1.8%
  • 2017: +1.9%
  • 2018: +2.0%

'A confidence motion on PM Valls' second government with a renewed focus on supply-side reforms was approved by parliament, albeit by a small majority,' writes Citi's Guillaume Menuet. 'The new Economy minister Emmanuel Macron noted that France is 'paying the price of a lost decade' and vowed to continue his predecessor's efforts on trimming regulation and reforming closed professions.'

Source: Citi

Italy faces poor export growth.

GDP Growth Forecast

  • 2014: -0.4%
  • 2015: +0.3%
  • 2016: +0.8%
  • 2017: +0.8%
  • 2018: +0.9%

'Despite the weaker euro, we expect tight credit conditions and poor export growth to continue weighing on recovery prospects, unless rapid implementation of reforms surprisingly gives a major confidence boost to domestic demand,' writes Citi's Giada Giani.

Source: Citi

Greece will see a shallower economic recovery in 2015.

GDP Growth Forecast

  • 2014: +0.1%
  • 2015: +1.3%
  • 2016: +1.6%
  • 2017: +1.7%
  • 2018: +1.8%

'2014 growth will probably be around 0.1%, somewhat below the official forecast (+0.6%),' writes Citi's Giada Giani. 'We expect the 2015 recovery also to be shallower, although supported by reduced fiscal tightening and further export competitiveness gains.'

Source: Citi

Ireland's GDP growth will be higher than the euro area average.

GDP Growth Forecast

  • 2014: +5.5%
  • 2015: +4.2%
  • 2016: +4.8%
  • 2017: +4.5%
  • 2018: +4.1%

'The Q2 surge in GDP (and IP) was probably partly erratic, and recent data suggest that Q3 GDP growth is around zero,' writes Citi's Michael Saunders. 'Even so, the economy's momentum remains strong, and GDP growth will probably stay far above the euro area average in 2015.'

Source: Citi

The United Kingdom's Monetary Policy Committee may hike rates by year end.

GDP Growth Forecast

  • 2014: +3.3%
  • 2015: +3.5%
  • 2016: +2.9%
  • 2017: +2.0%
  • 2018: +2.0%

'The jobless rate is likely to continue to fall rapidly, dropping below 6% by the end of this year and below 5% by the end of 2015,' writes Citi's Michael Saunders. 'Although pay growth is subdued, other guides (eg vacancies, surveys of labour shortages) suggest that labour market slack is shrinking fast. As a result, we continue to expect the MPC will hike rates soon, either in Q4-14 or Q1- 15, as an early step away from the current ultra-loose policy stance.'

Source: Citi

Switzerland is expected to keep rates low for some time.

GDP Growth Forecast

  • 2014: +1.1%
  • 2015: +1.3%
  • 2016: +1.7%
  • 2017: +1.7%
  • 2018: +1.7%

'Export volumes have stalled in recent months, the manufacturing PMI has dived by 5 points in the last two months, while the Kof activity guide in July-August was at its weakest since mid-2012,' writes Citi's Michael Saunders. 'With inflation still close to zero, the SNB is likely to keep rates on hold for an extended period.'

Source: Citi

Sweden's budget must cross a major political hurdle.

GDP Growth Forecast

  • 2014: +2.2%
  • 2015: +2.6%
  • 2016: +2.7%
  • 2017: +2.7%
  • 2018: +2.5%

'The SocDem-led bloc is trying to form a government that can pass a budget this autumn,' writes Citi's Tina Mortensen. 'With the nationalist SD holding the balance of power, this will likely prove a complex task, requiring cross-block cooperation. Hence, the SocDem-led coalition probably will have to make major concessions.'

Source: Citi

Denmark's near-term outlook does not look too bright.

GDP Growth Forecast

  • 2014: +0.6%
  • 2015: +1.3%
  • 2016: +1.7%
  • 2017: +1.9%
  • 2018: +2.0%

'The Danish economy returned to negative growth in 2Q, and with rising geopolitical unrest and weaker momentum in a majority of Denmark's key trading partners, the near-term outlook does not look too bright,' writes Citi's Tina Mortensen. 'In turn, we have more than halved our 2014 GDP forecast.'

Source: Citi

Norway's central bank has delayed tightening monetary policy.

GDP Growth Forecast

  • 2014: +2.3%
  • 2015: +2.2%
  • 2016: +2.6%
  • 2017: +2.8%
  • 2018: +2.6%

'Next year, declining oil-related investment and the ongoing erosion in competitiveness will probably keep mainland GDP growth at a below-trend rate pace,' writes Citi's Tina Mortensen. 'At the September MPC meeting, Norges Bank removed its near-term easing bias and lowered its forecast for the medium-term rate outlook by roughly 10bp, delaying its forecast for initial tightening to late-16 from mid-2016.'

Source: Citi

Canada still has economic slack despite accommodative financial conditions.

GDP Growth Forecast

  • 2014: +2.4%
  • 2015: +2.7%
  • 2016: +2.7%
  • 2017: +2.6%
  • 2018: +2.4%

'More robust US demand, elevated Canadian consumer confidence and extraordinarily accommodative financial conditions are all supporting output,' writes Citi's Dana Peterson. 'However, labour market indicators suggest that economic slack persists, and business investment remains lackluster. Broader trade should lead to increased business engagement in the expansion. Stronger US performance, the weaker CAD and energy infrastructure build-out should propel the economy ahead.'

Source: Citi

New Zealand will see continued moderate growth.

GDP Growth Forecast

  • 2014: +3.5%
  • 2015: +2.9%
  • 2016: +2.4%
  • 2017: +2.6%
  • 2018: +2.7%

'More timely reads on the economy suggest continued moderate growth in Q3,' write Citi's Paul Brennan and Joshua Williamson. 'Both business and consumer confidence have eased from their highs but they still remain relatively high and consumer confidence rose slightly in September.'

Source: Citi

India's economy is turning a corner.

GDP Growth Forecast

  • 2014: +5.6%
  • 2015: +6.5%
  • 2016: +7.0%
  • 2017: +7.1%
  • 2018: +7.1%

'The quarterly GDP data released earlier this month reinforces our view that the Indian economy may indeed be turning a corner,' write Citi's Rohini Malkani and Anurag Jha. 'GDP growth accelerated to 5.7%YoY in 1QFY15 compared to 4.6% in 4QFY14, with encouraging trends seen across supply-side and demand-side components. Incorporating the 1Q data, we maintain our view of FY15 GDP growth at 5.6% with risks balanced on both sides: upside risks from a faster-than-expected pick-up in investment and pent-up consumption demand being offset by a likely compression in government spending.'

Source: Citi

Indonesia's key exports have weakened.

GDP Growth Forecast

  • 2014: +5.1%
  • 2015: +5.1%
  • 2016: +5.5%
  • 2017: +5.5%
  • 2018: +5.7%

'Oil prices have subsided and copper exports partially resumed in Aug-Sep this year after licensing issues were resolved,' writes Citi's Helmi Arman. 'However exports of coal and palm oil, which contribute the bigger chunk of the commodity trade surplus, have weakened. Accordingly, we have also become less sanguine about the current account deficit outlook.'

Source: Citi

Taiwan's economy may be dragged down by China and a stronger dollar.

GDP Growth Forecast

  • 2014: +3.6%
  • 2015: +4.0%
  • 2016: +4.2%
  • 2017: +4.5%
  • 2018: +4.5%

'Although macro-economic data related to technology exports and production are likely to improve in coming months, renewed signs of weakness of China's economy and the strengthening USD are likely offsetting factors,' writes Citi's Adrienne Lui.

Source: Citi

Russia is facing sanctions that 'provide significant headwinds to growth.'

GDP Growth Forecast

  • 2014: +0.7%
  • 2015: +1.0%
  • 2016: +2.4%
  • 2017: +2.5%
  • 2018: +2.6%

'We are cutting our 2015 GDP growth forecast from 2.3% to 1.0% on the back of the further increase in Western sanctions,' writes Citi's Ivan Tchakarov. 'The combination of more-subdued investment and consumption spending, and tighter monetary policy, will probably provide significant headwinds to growth for longer than we previously anticipated.'

Source: Citi

Turkey is under pressure to relax monetary policy ahead of its 2015 elections.

GDP Growth Forecast

  • 2014: +3.5%
  • 2015: +3.5%
  • 2016: +3.7%
  • 2017: +4.0%
  • 2018: +3.9%

'In our view, recent developments suggest that it probably will be very painful -- but also unsustainable -- to rebalance the economy through a squeeze on domestic demand,' write Citi's Ilker Domac and Gultekin Isiklar. 'In this respect, nearterm focus probably will be whether the new Medium-term Program (to be released in early October) will contain credible targets and signs of structural reforms focusing on the supply-side. In light of rising growth concerns, we expect pressure for further relaxation in monetary policy to intensify ahead of the 2015 general elections.'

Source: Citi

Poland's economy will accelerate in coming quarters.

GDP Growth Forecast

  • 2014: +3.0%
  • 2015: +3.4%
  • 2016: +3.5%
  • 2017: +3.5%
  • 2018: +3.2%

'Taking into account currency weakness, continued growth in lending activity and relatively favourable situation in the labour market, we expect the economy to accelerate again in coming quarters,' writes Citi's Piotr Kalisz and Cezary Chrapek.

Source: Citi

The Czech Republic faces weaker foreign demand for its exports.

GDP Growth Forecast

  • 2014: +2.4%
  • 2015: +2.4%
  • 2016: +3.3%
  • 2017: +3.1%
  • 2018: +3.2%

'Domestic demand was supportive in 2Q, while July industrial production data and the August PMI point to further growth in 3Q14,' writes Citi's Jaromir Sindel. 'However, industrial capacity use fell slightly in July and the outlook on foreign demand seems to be weaker than before. Hence, we are slightly cutting our outlook for investment and exports in 2015, though the investment outlook may be supported by government investment while exports will probably still outperform foreign demand due to the weaker currency.'

Source: Citi

Romania sees slow growth in investment and private consumption.

GDP Growth Forecast

  • 2014: +2.0%
  • 2015: +3.4%
  • 2016: +3.6%
  • 2017: +3.6%
  • 2018: +3.6%

'After a closer look at the details of the 2Q GDP data, we decided to cut our 2014 growth forecast to 2% from 3%,' write Citi's Ilker Domac and Gultekin Isiklar. 'This revision is underpinned by the absence of a pick-up in investment spending, the anemic recovery in private consumption and the deterioration in the Eurozone growth outlook.'

Source: Citi

Brazil's has a crucial election coming up.

GDP Growth Forecast

  • 2014: +0.1%
  • 2015: +1.0%
  • 2016: +2.8%
  • 2017: +3.0%
  • 2018: +3.0%

'Recent polls have confirmed the higher popularity of Marina Silva compared to Eduardo Campos,' Marcelo Kfoury writes. 'Because of that, we now expect Silva to beat Dilma Rousseff in the second-round (on October 26), becoming the new Brazilian president in 2015. Silva's already-published platform suggests such a new government would implement more market-friendly economic policies to restore the 'macroeconomic tripod': floating exchange rate, credible inflation targets and primary surplus.'

Source: Citi

Argentina is likely to remain in default on its sovereign debt.

GDP Growth Forecast

  • 2014: +0.0%
  • 2015: -0.1%
  • 2016: +1.0%
  • 2017: +2.5%
  • 2018: +3.0%

'The scarcity of foreign currency continues to worsen and the next few months will probably be even more challenging,' writes Citi's Guillermo Mondino. 'Meanwhile, the likelihood of a prolonged default has increased, despite the need for external financing, exacerbating the pressures on FX markets.'

Source: Citi

Venezuela is in a recession.

GDP Growth Forecast

  • 2014: -1.0%
  • 2015: +1.9%
  • 2016: +1.9%
  • 2017: +1.9%
  • 2018: +1.9%

'The latest inflation data released by the central bank show YoY inflation standing close to 64% in August and, although GDP growth data have not been provided throughout the year, at this point it is clear the economy is in a recession,' writes Citi's Munir Jalil.

Source: Citi

Nigeria will see growth despite uncertainty around its next elections.

GDP Growth Forecast

  • 2014: +6.4%
  • 2015: +6.4%
  • 2016: +6.8%
  • 2017: +6.2%
  • 2018: +6.7%

'Although political uncertainty is set to rise towards the February 2015 elections, we still expect growth to remain robust,' writes Citi's David Cowan. 'The recent GDP rebasing exercise has made Nigeria Africa's largest economy.'

Source: Citi

South Africa's mining strike has stalled production growth.

GDP Growth Forecast

  • 2014: +1.4%
  • 2015: +2.6%
  • 2016: +3.4%
  • 2017: +3.7%
  • 2018: +4.3%

'Having flagged downside risk from the mining strike in H1 13, the manufacturing strike in Q3 14 and weaker consumption activity, these realities underpin our adjustment,' writes Citi's Gina Schoeman. 'Production growth has stalled and has negatively impacted investment, exports and business confidence.'

Source: Citi

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