Here's what the world's big economies will do through 2016

It’s all connected.

From interest-rate hikes in the US to the Greek debt crisis, events within nations affect economies across the globe.

A June report from analysts at Nomura Securities broke down all the changes happening and the prospectus for a variety of important economies.

According to the report, the US should continue its slowing rebound leading to a Fed rate hike in September, while continued low oil prices should prolong Canada’s slump.

In Europe, the European Central Bank faces serious pitfalls as it tries to strengthen the Eurozone and is projected to continue asset purchases into September 2016. Analysts are worried that the UK will react too slowly in raising rates which could lead to another crisis.

Asia remains the home to the strongest emerging markets despite the slowdown in Chinese growth. The developed countries of the continent are going in separate directions. South Korea and Australia have weakening economies, while Japan and India are heading in the right direction.

In total, global GDP growth is expected to reach 3.1% in 2015, down from 3.3% in 2014. Global consumer inflation should also slide to 3.2% this year, from 3.6% in 2014.

United States

Traders work on the floor of the New York Stock Exchange, as a television screen displays Federal Reserve Chair Janet Yellen.

Projected Real GDP Growth

  • 2015: 2.0%
  • 2016: 2.5%

Projected CPI Growth

  • 2015: 0.4%
  • 2016: 2.2%

Commentary: The positives should generally outweigh the negatives and steady growth is expected. 'We continue to expect the economy to accelerate in Q2, but we do not foresee a breakout in growth, as the economy still faces headwinds,' said Nomura analysts. A full takeoff will be limited by the dragging oil industry and suppression of exports because of the strong dollar. Expectations are for a September interest rate increase by the Fed and continuing increases of 25bp per quarter.

Source: Nomura

Canada

Alberta Premier CEO Jim Prentice.

Projected Real GDP Growth

  • 2015: 1.4%
  • 2016: 2.0%

Projected CPI Growth

  • 2015: 1.1%
  • 2016: 2.1%

Commentary:The steep drop in oil prices is continuing to take its toll on the Canadian economy, as evidenced by a 0.6% contraction in GDP during Q1. This uncertainty has seeped into Canadians' spending habits. 'Household spending was quite weak on the quarter and has surprised some, as it should have been supported by lower gasoline prices. The increase in the saving rate suggests that could be linked to increased uncertainty on the economic outlook as a result of the oil price shock,' said the report. It also noted that business investment and exports are expected to stay weak.

Source: Nomura

United Kingdom

Head of the Bank and England and Monetary Policy Committee Mark Carney.

Projected Real GDP Growth

  • 2015: 2.1%
  • 2016: 2.6%

Projected CPI Growth

  • 2015: 0.2%
  • 2016: 2.0%

Commentary:The rate of growth has consumed almost all the spare capacity in the economy and coupled with a growing number of households in debt points to possible problems ahead. Nomura analysts expect a rate hike from the Monetary Policy Committee to come in February 2016, but it might come too late. 'UK stimulus is utilising spare capacity rapidly. Failure of policy to respond is sowing the seeds of the next crisis,' said the report.

Source: Nomura

Euro area

European Central Bank (ECB) President Mario Draghi speaks during the bank's monthly news conference in Frankfurt, August 7, 2014.

Projected Real GDP Growth

  • 2015: 1.3%
  • 2016: 1.1%

Projected CPI Growth

  • 2015: 0.2%
  • 2016: 0.8%

Commentary:The European Central Bank has made it clear that they intend to stay the course with current policy, which should lead to steady GDP growth and inflation. 'ECB President Draghi has confirmed that the Governing Council is not discussing an exit strategy with inflation and growth projections conditional on the full implementation of the announced policy measures. Furthermore, Mr. Draghi hinted that further easing is a viable option in the event of unwarranted tightening of monetary policy or a materialization of downside risks to growth or inflation,' said the Nomura report. Greece is the looming threat to continued growth and the deal (or lack of one) will define future projections.

Source: Nomura

Hungary

Russian President Vladimir Putin and Hungarian Prime Minister Viktor Orban (R).

Projected Real GDP Growth

  • 2015: 3.3%
  • 2016: 2.4%

Projected CPI Growth

  • 2015: -0.1%
  • 2016: 2.7%

Commentary:Declining support for Prime Minister Victor Orbán has caused him to shift to policies closer to the European Union than Russia. Nomura analyst's said this is good and bad. 'Broadly, the shorter-run positive growth and fiscal (and current account) picture give way in the longer run to more negativity on the credit through politics in our view,' said the report. Based on this assessment, the short-term attempts to boost the economy will lead to an increase in GDP growth this year, but a slower 2016.

Source: Nomura

Poland

Andrzej Duda (L), presidential candidate of the Law and Justice Party (PiS), smiles after the announcement of the first exit poll results on the second round of presidential elections in Warsaw, Poland, May 24, 2015.

Projected Real GDP Growth

  • 2015: 3.7%
  • 2016: 3.7%

Projected CPI Growth

  • 2015: -0.6%
  • 2016: 1.9%

Commentary:Projections for Poland hinge heavily on the outcome of lower-house parliamentary elections in October. The surprise victory by Andrzej Duda in the presidential election raises the chances that the opposition PiS party could take the majority. What that would mean for the Polish economy is unclear. 'A PiS government could, through short-term measures, boost growth well above 4.0% into 2016 and 2017, but at the same time damage underlying potential growth (which we put somewhere nearer the upper end of 3.5-4.0%) pushing it down to more like 3.0%,' said analysts. Additionally, despite pronouncements that it was finished cutting policy rates, the analysts said that moves by the European Central Bank could force the Polish Monetary Policy Council to reconsider.

Source: Nomura

Russia

Russian President Vladimir Putin visits an oil refinery.

Projected Real GDP Growth

  • 2015: -3.8%
  • 2016: -1.6%

Projected CPI Growth

  • 2015: 13.1%
  • 2016: 7.6%

Commentary:The worst seems to be over. GDP contraction is slowing and deflation seems to be following in its wake. Oil prices, however, would need to increase significantly to prevent the government from drastically cutting spending. In terms of monetary policy, the report said, 'The current CPI outlook suggests that the CBR (Central Bank of Russia) will deliver another rate cut on June 15. We expect the CBR to decrease its policy rate to 10% by year-end.' While there seems to be some improvement, the Russian economy remains weak.

Source: Nomura

Australia

Projected Real GDP Growth

  • 2015: 2.3%
  • 2016: 2.1%

Projected CPI Growth

  • 2015: 1.9%
  • 2016: 2.3%

Commentary:Despite positive signals during Q1, underlying problems are expected to drive down the Australian economy. 'Beneath the surface, the results looked softer, a theme reinforced by sharply lower April export values and flat retail sales,' said the report. 'We maintain a below-consensus growth view and see significant challenges ahead, with slower growth in the region and lower commodity prices affecting national income.' Analysts also expect an interest rate cut from the Royal Bank of Australia in November due to a combination of predicted soft Q2 GDP growth, slower Chinese export purchases, low commodity prices and the Australian dollar trading above fair value.

Source: Nomura

China

Projected Real GDP Growth

  • 2015: 6.8%
  • 2016: 6.5%

Projected CPI Growth

  • 2015: 1.5%
  • 2016: 1.8%

Commentary:Slowdowns in growth should prompt more action from the People's Bank of China. Decreases in exports, retail spending and projected GDP growth have convinced analysts that action will be taken to stimulate the economy. The PBoC has already lowered the reserve requirements and interest rates for banks, helping some, but more easing is expected. 'However, the headwinds to growth remain powerful and deleveraging has yet to play out. We maintain our forecast for two more 50bp RRR cuts and two more 25bp interest rate cuts in 2015, with July the most likely timing for the next easing,' says the report.

Source: Nomura

Japan

Japanese Prime Minister Shinzo Abe.

Projected Real GDP Growth

  • 2015: 1.1%
  • 2016: 1.8%

Projected CPI Growth

  • 2015: 0.8%
  • 2016: 1.2%

Commentary:The Japanese government injected 3.5 trillion yen ($US28.3 billion USD based on recent exchange rates) into the economy in February and cut the corporate tax rate by 2.51% to stimulate growth. A 3.9% growth in Q1 GDP indicates the changes are helping, despite forecasts of only 0.8% GDP growth this quarter. The report outlined 3 reasons to be confident in continued growth for the back half of the year:

'We believe growth in H2 2015 will pick up with 1) stronger private consumption growth after base salary increases and a rise in summer time bonuses, 2) a pick-up in exports, and 3) a rise in public works spending as a result of the FY14 supplementary budget.'

Source: Nomura

Hong Kong

Hong Kong Exchanges and Clearing Ltd. Chairman Chow Chung-kong (L) and Hong Kong Chief Executive Leung Chun-ying.

Projected Real GDP Growth

  • 2015: 2.5%
  • 2016: 3.0%

Projected CPI Growth

  • 2015: 3.7%
  • 2016: 4.3%

Commentary:Nomura is bearish on Hong Kong's outlook. 'We see downside risks to Hong Kong's economy, which is very exposed to trade and financial flows. Hong Kong is among the most vulnerable in Asia if China were to experience a macro-financial hard landing or if the US Fed were to raise rates sharply. Domestically, the property market imbalance is large and poses risks to macroeconomic and financial stability,' said the report. Real estate prices have skyrocketed in Hong Kong, causing increased income inequality and burden on low-income families. The report also expects the diverging monetary policies of the China and US, which both are closely tied to the economy, put Hong Kong in an uneasy economic position.

Source: Nomura

India

Projected Real GDP Growth

  • 2015: 7.8%
  • 2016: 8.3%

Projected CPI Growth

  • 2015: 5.0%
  • 2016: 5.1%

Commentary:After a weak end to 2014, India is on track for a recovery. GDP growth increased 0.9% in Q1 and strong monthly economic data supports a bullish view on the Indian economy. 'We expect higher disposable incomes, increased public investment in infrastructure, debottlenecking of stalled investments, improving corporate profit margins and easier financial conditions to support a cyclical recovery,' said analysts. A weak monsoon season and slower export demand are headwinds that will keep the improvement slow but steady. Additionally, inflation should continue to decrease for the summer and then stabilise around 5 to 5.5%.

Source: Nomura

Indonesia

Projected Real GDP Growth

  • 2015: 4.8%
  • 2016: 5.3%

Projected CPI Growth

  • 2015: 6.8%
  • 2016: 4.7%

Commentary:An increasing CPI and trade deficit have prevented Bank Indonesia from lowering rates to stimulate a slowing economy. 'Bank Indonesia (BI) left the policy and FASBI rates at 7.5% and 5.5%, respectively, at its May meeting but announced plans to loosen macroprudential measures 'to keep the economic growth momentum.' This underscores BI's policy dilemma -- it is worried about growth but at the same time elevated inflation and (current account deficit) pressures mean it does not have room to cut policy rates and hence it is resorting to other measures,' said the report. As of mid-May, tax revenue had only hit 27% of the government's projections meaning that there will be scalebacks in crucial infrastructure spending.

Source: Nomura

Malaysia

Projected Real GDP Growth

  • 2015: 4.7%
  • 2016: 4.3%

Projected CPI Growth

  • 2015: 2.2%
  • 2016: 3.2%

Commentary:The implementation of the Goods and Services Tax in April should provide higher revenues for the government while also producing only short-term negative impacts on GDP growth and inflation. 'We expect the extent of the pullback from private consumption in Q2 to be manageable, especially given the impact on inflation from the GST was milder than expected,' said Nomura.

Source: Nomura

Philippines

Projected Real GDP Growth

  • 2015: 6.1%
  • 2016: 7.0%

Projected CPI Growth

  • 2015: 2.5%
  • 2016: 3.2%

Commentary:GDP failed to meet expectations in Q1, but this should spur the government to commit further resources to its infrastructure spending, raising projections for 2016. 'Because of ample fiscal room and the elections in May 2016, we expect these increases in public spending to persist, supporting our revised 2016 growth forecast of 7%. This should also crowd in private sector investment, which, encouragingly, saw double-digit growth in Q1,' said the report. Increased tax revenues will help bolster the government investment into stimulating the economy.

Source: Nomura

South Korea

Health workers working aginst the spread of MEP.

Projected Real GDP Growth

  • 2015: 2.5%
  • 2016: 3.0%

Projected CPI Growth

  • 2015: 0.8%
  • 2016: 1.8%

Commentary:The rate cut from the Bank of Korea shows that the country's recovery is slowing considerably. Expectations are for a slowdown in exports to all markets caused by the strength of the Korean won. Corporations are also expected to suffer. 'We expect subdued Korean corporate performance this year, which is negative for nominal wages and business investment,' said the Nomura report. Additionally, the worry of a MERS (Middle East Respiratory Syndrome) outbreak has already led the BOK to cut interest rates due to the fear that it could drag down consumer spending and worker productivity.

Source: Nomura

Taiwan

Projected Real GDP Growth

  • 2015: 3.5%
  • 2016: 3.8%

Projected CPI Growth

  • 2015: -0.3%
  • 2016: 2.0%

Commentary:A decrease in exports has brought the Taiwanese economy to a sluggish pace of growth. Nomura's analysts said:

'Overall, it is hard to envisage a strong rebound in growth, as weak foreign demand and increasing competition are likely to weigh on Taiwan's exports, while domestic demand is constrained by a 'hollowing out' of industry to China, a lack of inward FDI, political uncertainty ahead of the January 2016 elections and an ageing population.'

Source: Nomura

Thailand

Projected Real GDP Growth

  • 2015: 2.7%
  • 2016: 3.5%

Projected CPI Growth

  • 2015: 0.3%
  • 2016: 1.2%

Commentary:Coupling of political uncertainty and weak demand data led to a gloomy forecast for Thailand. 'The biggest drag to growth was exports, while domestic demand was more mixed, with public investment rising but private demand more muted, weighed down by high household debt, excess operating capacity and continued political uncertainty,' said the report. After the removal of ex-Prime Minister Yingluck Shinawatra and a military takeover, the government is attempting to draft and pass a new permanent constitution. So far talks have been divisive, which has left a cloud over economic activities of Thai citizens.

Source: Nomura

Brazil

Projected Real GDP Growth

  • 2015: -1.3%
  • 2016: 1.0%

Projected CPI Growth

  • 2015: 8.6%
  • 2016: 5.3%

Commentary:1Q numbers were dismal, leading to a projection of significant GDP contraction. The Nomura analysts stated in the report:

'The -0.2% q-o-q drop was driven by very negative movements in both private consumption and investment -- a bigger headline fall was avoided only by strong net exports. In an environment of rising unemployment and historically low business and consumer confidence (along with monetary and fiscal tightening) a turning point is not around the corner for domestic demand, we believe.'

Source: Nomura

Mexico

Projected Real GDP Growth

  • 2015: 2.8%
  • 2016: 3.8%

Projected CPI Growth

  • 2015: 2.9%
  • 2016: 3.5%

Commentary:The opening of Mexico's oil fields to companies other than Pemex, the state-owned monopoly, for the first time since 1938 has given reason for an optimistic outlook. Other good news comes in the form of near-target inflation. After stubbornly hovering around 4% for a decade, inflation is projected to come down to around the desired 3%. Lower than expected growth in early 2015 brought down GDP expectations, but the new legislation and continued US recovery should keep Mexico on a good track.

Source: Nomura

South Africa

Projected Real GDP Growth

  • 2015: 1.9%
  • 2016: 2.6%

Projected CPI Growth

  • 2015: 5.1%
  • 2016: 6.4%

Commentary:Public power company Eskom has been forced to shut off power in some areas to protect the entire grid, a process called loadshedding, at its highest rate since 2008. This has dampened business investment and remains a possible issue for the economy going forward. Additionally, the South African Reserve bank has held off on raising interest rates so far, but that may not last. 'The real hawkishness came in a few specific references, especially on inflation where risks are still skewed to the upside. A July hike remains our baseline, probably with a slightly higher probability now,' said the report.

Source: Nomura

Turkey

Turkish Prime Minister Ahmet Davutoglu and his wife Sare Davutoglu.

Projected Real GDP Growth

  • 2015: 2.8%
  • 2016: 3.1%

Projected CPI Growth

  • 2015: 7.4%
  • 2016: 7.5%

Commentary:The uneasy political situation following June elections is expected to bleed over into the economy, creating a volatile situation. 'We expect volatility to remain high because of the difficulties in forming a coalition government. Our current baseline scenario is an AKP-led government, with early elections as the second most likely scenario,' said Nomura's report. The unstable economic situation is exacerbated by high levels of inflation, with food prices up 12% year over year.

Source: Nomura

Other markets of note

Nomura listed other emerging markets and Latin American countries without detailed commentary. Here are those numbers:

Argentina

  • Projected Real GDP growth: -3.0% (2015); 2.2% (2016)
  • Projected CPI growth: 42.0% (2015); 40.0% (2016)

Colombia

  • Projected Real GDP growth: 3.2% (2015); 2.6% (2016)
  • Projected CPI growth: 4.1% (2015); 3.5% (2016)

Chile

  • Projected Real GDP growth: 2.7% (2015); 3.6% (2016)
  • Projected CPI growth: 3.7% (2015); 3.1% (2016)

Czech Republic

  • Projected Real GDP growth: 3.9% (2015); 2.7% (2016)
  • Projected CPI growth: 0.3% (2015); 1.2% (2016)

Israel

  • Projected Real GDP growth: 2.6% (2015); 3.0% (2016)
  • Projected CPI growth: 0.9% (2015); 1.7% (2016)

Romania

  • Projected Real GDP growth: 3.0% (2015); 3.0% (2016)
  • Projected CPI growth: 2.8% (2015); 3.0% (2016)

Source: Nomura

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