13/7/15: About That Europe's Recovery Party

Last week, IMF published its WEO update for July. Little to go by in the general 'news' terms, but a telling sign of just how well repaired the world economy is becoming.

First, off the top, IMF dropped its forecast for global growth for 2015 from 3.5% in April 2015 to 3.3% in July. 2016 outlook remains unchanged at 3.8%. Given IMF estimates 2013-2014 growth at 3.4% each year, this means that 2015 is now expected to be sub-average for the three years period - hardly a sign of an improvement.

When considered by broader regions, Advanced Economies drove deterioration in the outlook. 2015 growth in advanced economies is now projected to be around 2.1%, down on 2.4% projection back in April. 2016 outlook is unchanged at 2.4%. Meanwhile, Emerging Markets and Developing Economies growth forecast has deteriorated from 4.3% in 2015 projected back in April, to 4.2% in July update. 2016 outlook remains the same at 4.7% projected growth rate.

IMF lauded the return to growth in the Euro area, which is supposedly booming - forecast to expand at 1.5% in 2015 (July outlook), same as in April outlook. And the Fund produced a doozer of an uplift to 2016 forecast growth - from 1.6% expected back in April to 1.7% expected in July update. Meanwhile, the U.S. economy got severely downgraded to 2.5% forecast expansion for 2015 (against 3.1% forecast back in April) and to 3.0% expansion forecast for 2016 (against 3.1% forecast back in April).

You can't make this up: the return to growth in Europe is still full-blown 40 percent lower growth than in wobbling U.S. Just in case you wondered: over 2013-2015, according to the latest forecast from the Fund,

• U.S. economy will expand, cumulatively, by 5.39%
• Euro area economy will grow by 1.91%
• Japan will grow by 2.31%
• UK will expand by 7.16%, and
• Other Advanced Economies group will grow by 7.90%.

Yes, that's right - Euro area will under-perform Japan, the heroes of 'blanket QE bombing' of the economy. 

20/1/2015: IMF Global Growth Outlook 2015-2016: Europe Slips, U.S. Powers Away

My analysis of the IMF update to the World Economic Outlook is now available on Learn Signal blog: http://blog.learnsignal.com/?p=148

7/10/2014: IMF on Global & Euro Area Growth: Cloudy with 40% chance of a storm

My analysis of the IMF 2014-2015 forecasts for the global economy and euro area are now available on Learn Signal Blog: http://blog.learnsignal.com/?p=62 

17/4/2013: Talking of Being Stuck in a Wrong Hood...

In recent presentations on the global economy, euro area and Ireland I have stressed the fact that we (EA and Ireland) are stuck in the 'wrong hood' - low growth, ageing and socially sclerotic environments with no structural drivers for creation of new value added.

Here's a good visual courtesy of the IMF WEO April 2013 (full publication here):

First, the World of new regionalisation, with:

• Stagnant North-East or Fortress Europe
• Drowsy North-West or Fortress North America
• Dynamic Asia-Pacific or Bad Boys Gang
• Dynamic Latin America or Government Spending Junkies
• Emerging Africa or Catch-up Hare:

 And zooming onto our (Ireland's) hood:

Per IMF (italics are mine): "The near-term outlook for the euro area has been revised downward, with activity now expected to  contract by ¼ percent in 2013, instead of expanding by ¼ percent as projected in the October 2012  WEO (Table 2.1). This reflects declines in growth projections across all euro area countries, with notable revisions in some core members (France, Germany, Netherlands). Growth will strengthen gradually through the year, reaching 1 percent by the fourth quarter, as the pace of fiscal consolidation (at ¾ percent of GDP) is eased by almost half during 2013.

But growth will generally remain subdued as improvements in private sector borrowing conditions are hampered by financial market fragmentation and ongoing balance sheet repair. Further headwinds to growth could result from a sustained appreciation of the euro that lowers competitiveness and dampens export growth."

Table referenced above:

Do note that per above, with exception of France, all euro area economies are expected to pursue 'exports-led' or 'exports-supported recovery' in 2013-2014. And also do note that unemployment in this 'exporting haven' is not expected to improve in 2013-2014.