Has recent economic data got you feeling that the global economy may be losing some of the momentum it carried at the start of 2017?
If your answer is yes, you’d be on the money.
Recent data has cooled a touch, and it’s been led by emerging economies.
That is perfectly demonstrated by the chart below from ANZ. It shows the bank’s G4 and emerging market growth “trackers” up until May, a real-time indicator of GDP growth based on hard, soft and financial data.
After a rollicking recovery in 2016 the emerging markets tracker has swung back firmly into the zone associated with below-trend growth, and the momentum is continuing to decelerate.
“The ANZ EM Growth Tracker declined again in May, with declines in both emerging markets Asia and Latin America,” says ANZ. “The moderation in this index is largely being driven by financial data and, to lesser extent, hard data.”
ANZ says this moderation may have further to run given that activity in China is likely to cool amid higher short-term rates and efforts by Chinese officials to cool rampant credit demand.
However, in comparison to what’s being seen in emerging markets, the tracker for the world’s largest developed nations continues to point to above-trend GDP growth, although its momentum too appears to be nearing its cyclical peak.
“The contribution to the G4 growth pulse is broadly based across regions, with each country growing at an above-trend pace,” says ANZ.
Let’s see what the second half of the year will bring.