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Euromonitor International is pleased to provide our blog readers with the executive summary of our new economic outlook Global Economic Forecasts: Q2 2016.
So far so good – no return to global recession has happened yet, but the newest indicators for the global economy signal a weakening, and the business mood is worsening. In this context, we have revised the world GDP growth forecast down to 3.0% for 2016 and 3.2% for 2017. In our view, the risks are downside this year.
The world’s stock markets have rebounded from the sharp drops experienced in early 2016, but financial stability has decreased, risk-aversion is rising, global lending conditions are tightening and monetary policy power is questionable.
As a result, consumer and business confidence indicators are declining across the developed markets, and this will have an impact on consumption and investment decisions.
Emerging markets are struggling to grow and are now suffering from a significant slowdown in capital inflows or, worse, capital outflows.
Political events ahead are also overshadowing the economic perspective, with Donald Trump running for US presidential elections, the possibility of the UK leaving the EU, the presidential impeachment in Brazil, not to mention the tensions with Russia and increased terrorism threats.
Looking at the two major global risk scenarios from Euromonitor Macro Model, we assign a 10-15% probability over a one year horizon to both Advanced Economies stagnation and Emerging Markets slowdown scenario. Each of these scenarios would cause a decrease in the global real GDP growth to around 2.6% in 2016.