The loss of momentum in GDP growth worldwide in 2015, which could reach 3.2%, can be explained by the slowdown in the main emerging economies. The mild recovery of the developed world has been insufficient to offset the slowdown in the emerging and developing economies, which already account for nearly 60% of global GDP.
Global GDP growth and inflation in 2015
(Percentage of real growth)
|The United States||2.5||0.1|
|South America (1)||(1.6)||20.0|
Source: BBVA Research estimates.
(1) It includes: Brazil, Argentina, Venezuela, Colombia, Peru and Chile.
The outlook for growth in 2016 remains at 3.2%. Deleveraging needs to continue in the developed world in an environment of all-time low inflation, weak global trade and doubts that are holding back investment. Against this backdrop, emerging economies are facing China's “landing”, the normalization of the monetary policy in the United States and the fall in commodity prices.
Moderate economic growth, vulnerable to risks
Economic growth for 2016
(Percentage of GDP)
Source: BBVA Research.
(1) South America includes Argentina, Bolivia, Chile, Colombia, Paraguay, Peru and Uruguay.
The key to the global scenario is the final outcome of China's transition toward lower and more sustainable rates of growth, while it rebalances its economy toward a greater weight of services and the market.
The normalization of the monetary policy in the United States, although gradual, involves interest rate hikes that make investments in emerging markets less attractive. The pace of the hikes will be a good thermometer to assess the strength of the cycle in the United States (and in the rest of the world), but it will be slow, given the environment of low inflation.
Lastly, the downward adjustment of commodity prices, due to increases in their production higher than demand expectations, is intensifying the deterioration in exporting economies, while affecting those with the greatest need to fund their domestic growth with external saving and foreign currency.
In short, an uncertain landscape, given that the room for maneuver in the face of new global risks is limited, with a Federal Reserve (Fed) that has just began to increase rates very cautiously; with the European Central Bank (ECB) and the Bank of Japan announcing new measures to achieve their inflation targets; and with great uncertainty on China’s economic policy goals (and the ability to implement them).
A major challenge