Despite soft start to the year, 2015 should see continued growth
Global growth is likely to remain constrained in 2015. Monetary easing outside the United States will likely have a positive impact later in the year, but for now, debt deleveraging in Europe, Japan, and China will constrain potential growth.
Within the next couple of quarters, commodity consumers among emerging market economies may benefit from lower oil prices, and the United States and United Kingdom continue to benefit from their historic quantitative easing policies.
Despite the softer start to 2015, we believe U.S. growth should average 2.5% to 3% for 2015, due to solid consumer spending, some lift from investment, and a tailwind from low oil prices. Housing continues to recover from the financial crisis, but its contribution to investment growth will remain modest. Export growth is a risk to our forecast, due to the stronger U.S. dollar.
Deleveraging for Europe and Japan may continue to constrain growth, with growth remaining slow in 2015. Both the European Central Bank and the Bank of Japan will be required to continue monetary accommodation to support economic activity.
Inflation pressures will continue to slow across emerging market economies, and 2015 is likely to see little uptick in growth. Commodity-producing economies will continue to struggle with lower raw material prices. Commodity-consuming economies will see some lift from lower prices, and some monetary stimulus may lead to stabilization in growth rates late in the year.
For more information, go to https://reserve.usbank.com/insights/market-economic-update.
Robert L. Haworth, CFA, is a senior investment strategist and Darrell Behnke is the Madison market leader for the Private Client Reserve of U.S. Bank.
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