After a long period of decline, the rate of global economic growth is finally going up again, according to a chart this morning from Citi analyst Mark Schofield and his team:
The dark blue line on the chart shows estimates of global GDP growth in percentages, as ranked on the left-hand axis. While global economic growth has been growing for a while, the speed of that growth was going down. The fact that the dark blue line perked up a bit in July, to 2.7%, shows that earth is accelerating, at least economically. (The right-hand axis ranks the light blue columns, which show the difference in GDP growth between emerging and developed countries.)
The Citi note says:
After several GDP forecast downgrades over the course of this year, we are edging our 2015 global growth forecast up to 2.7% (from 2.6% last month) but we are cutting our 2016 forecast to 3.3% from 3.4%. Allowing for the possibility that China’s official data overstate the economy’s “genuine” pace, global GDP growth this year is probably about 2.3-2.4%, a bit below the long-run norm.
China, as usual, is the biggest factor:
… China’s official data show real GDP growth at 7.0% YoY in Q2, matching the Q1 pace. In practice, “genuine” GDP growth probably is below 5%. Further easing is likely via interest rates, RRR cuts and central government releveraging. Even so, risks are on the side of further weakness given the elevated real exchange rate, limited size of new technology sectors and hangover from the recent credit boom.
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