Economic Briefings

Update outlook global economy

Thursday, July 23, 2015 — Following the recent economic data from the United States, the euro area and even China the world economy seems to continue to grow gradually.

• Growth in the Western countries is being driven to a significant extent by an increasing consumer spending.  
• The persistently low oil price, meanwhile, continues to underpin real income growth.
• Headline inflation remains low, but will gradually start to rise in the months ahead.
• With US unemployment also falling to a level equated with full employment, the Fed is probably preparing its first interest-rate hike for as early as September. ​

However, given the very loose monetary policy in the rest of the world economy, especially in the euro area, this interest increase does not need to result in a spike in bond yields of the kind that we have seen in 1994.

Certain economic risks nevertheless remain. While Europe eventually arrived at an extremely late and maybe only temporary solution for Greece's debt problem, a number of vulnerable emerging economies could run into difficulties when the Fed begins to tighten its policy. This will not, however, jeopardise the recovery in world economic growth.

You will find the full economic report in attachment.