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Is the World Economy Recovering or Faltering? Video

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Is the World Economy Recovering or Faltering

Today is Thursday 12th January 2016 and we are asking the question – is the World Economy as badly off as some would have you believe and is it recovering or faltering?

Well we have already heard in the last couple of weeks that US GDP has grown some 1.4% in the second quarter of 2016 and rose dramatically to 3.5% in the third quarter, primarily reflecting an upturn in private inventory investment, an acceleration in exports, a smaller decrease in state and local government spending, and an upturn in federal government spending. It is now forecast that GDP for the whole of 2016 will stand at between 1.6% - 1.9% and is expected to grow without any President Trump economic stimulus to 2.1% in 2017. As we have already mentioned in previous videos, Donald Trump has provided a target of growth rate of 4% for 2017.

The UK Office of National Statistics announced that growth in the 1st quarter of 2016 for the UK was 0.3%, 0.6% in the second quarter, 0.6% in the third quarter and the final quarter too is expected to be in positive territory at or around 0.5% thereby perhaps suggesting UK growth for the year to stand close to 2% overall – far better than was feared post Brexit.

In Europe the 1st quarter growth rate was 0.5% followed by 0.3% in the second quarter and 0.3% in the third quarter and is predicted to stand at 0.4% growth in the fourth quarter thereby providing an annual rate at or around 1.5%.

2 days ago, the World Bank increased its Growth forecasts for 2017

It stated that global growth will accelerate slightly as recovering oil and commodity prices ease pressures on emerging-market commodity exporters and painful recessions in Brazil and Russia come to an end.

In its latest Global Economic Prospects report, It said it expected 2017 real gross domestic product growth to rebound to 2.7% from a post-financial crisis low of 2.3% last year.

Growth in advanced economies is expected to edge up to 1.8% in 2017 from 1.6% in 2016, while emerging and developing economies will see growth accelerate to 4.2% this year from 3.4% last year.

U.S. growth is predicted at 2.2%, but the increase could be considerably larger should expansionary fiscal policies be adopted by a President Trump regime.

Of course the policies of President-elect Trump can enhance or derail these figures and frankly we shall have to wait and see. However the World Bank also predicts Chinas growth rate to stand at 6.2% in 2017 (down from 6.7%) but India to expand to 7.6% compared to 7% in 2016.

Next week the IMF will announce its outlook for 2017 and we suspect it will be similar to the World Bank.

Of course we all have to take into account imperfect statistics and in many cases manipulations. However as we have often stated, follow the trend not just the underlying figures.

Nevertheless, our message is we hope quite clear, we appear to be entering into a new system of growth. Not hugely strong but equally not collapsing as others would have you believe. If these bodies are right and we suspect they are short term, then we can expect interest rates to rise and to some degree precious metal prices to falter. However, as we have witnessed the past couple of weeks, the uncertainty of a Trump Presidency moves people, sentiment and markets from Euphoria to Trepidation and we can truly and honestly only give a fair prediction once those policies are known. Just a little over a week before he takes office and we are confident that his policies will be rolled out quite quickly thereafter.


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