Download Schroders Economic Infographic Mar 2015

Marketing material
Schroders Economic Infographic Mar 2015
Global growth
Macro risks
Europe
Acceleration in advanced economies
offset by weaker growth in emerging
markets
Probability analysis of future scenarios
Recovery
resumes as
political risk
subsides
Def
lat
ion
r for longer Sec
ar
ula
lowe
y
l
i
rs
O
tag
na
tio
4%
1.1%
1.3%
EMERGING
MARKETS
4.2%
3.7%
JAPAN
0.0%
1.6%
• Inflation in the advanced world is
expected to record its lowest rate for five
years in 2015, but picks up in 2016 as the
impact of lower energy prices fades.
• We do not expect sustained deflation in
the eurozone or in the wider global economy.
In the US we expect the Fed funds rate to rise to 1.25% by
end 2015 and then peak at 2.5% in 2016.
Emerging
economies
Oil producers
Decline in oil prices
favours advanced over
emerging economies
Advanced
economies
Net oil consumers
Feeds through quicker as
government does not attempt to
fix the price through subsidies
6%
4%
65%
se
li n
6%
3%
e
Growth in
developed markets
offsets lower growth in emerging
markets
O the r
Greek crisis
fading
e
EUROZONE
Oil
price
falls to,
and stays
at, $30
per barrel
bl
3.2%
UK - growth expected
to slow to 2% in 2016
on back of weaker
investment and fiscal
tightening that will result
after May’s election
ru
m
2.4%
Financial
system
and
demand
collapse
in China
Region
appeared to
shake off
Ukraine/Russia
concerns
s
Ru
s ia
n
ry
USA
ationary
Defl
2015
Ba
2014
2015
1.3%
Economy falls
into a slump
E
4%
5%
REGION
2016
1.6%
iral China hard land
ing
y sp
nar
tio
fla
de
Global
activity
grinds
structurally
lower
Refla
tion
ary
G7 B
oom
Z
ry
iona
flat
Re
ty
austeri
ons
and
b
a
EZ
n
3%
na
Global growth
Advanced economies grow
in response to loose monetary policy
To head off a
political backlash
tio
fla
ag
t
S
Europe is hit by
disruption to energy supply
A lower
oil price
Ongoing euro
weakness
Lower interest
rates
Increased
banking
activity
BRICs
Worries: Fed rate rise > hike > trigger EM corporate defaults & economic slowdown
CHINA
Growth outlook: unchanged
6.8%
6.5%
2015
2016
• Cheap oil + overcapacity + slower
growth = lower inflation
• Further monetary easing expected
BRAZIL
Growth outlook: downgraded
-0.6%
0.9%
2015
2016
• Petrobras scandal, fiscal consolidation,
and threat of electricity rationing
• One-off impact of electricity tariff and
currency weakness
• Further rate hikes from the central bank,
with potential cuts in Q3-Q4 as growth sours
RUSSIA
Growth outlook: downgraded
-4.9%
-0.4%
2015
2016
• Weaker oil price hits growth through
reduced exports and fiscal support
• Inflation shooting up thanks to
currency weakness and sanctions
INDIA
Growth outlook: unchanged
7.5%
2015
7.8%
2016
• Change in GDP calculation investment growth remains weak
and reforms are needed
Source of data: Schroders
Important Information: Schroders has expressed its own views in this document and these may change. This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The
material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations.
Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the
document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the
amount originally invested. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Conduct Authority. For your security, communications may be
taped or monitored.