The world economy will lose further some momentum this year, concludes economists in DNB Markets brokerage house’s fresh forecast report “Economic Outlook”, which was presented Wednesday.
After an overall growth in value added in the world at 3.4 percent in 2014, it fell to three percent last year and is going to be even a tenth lower this year, predicts chief economist Øystein Dørum and the other economists of brokerage.
– the world economy keeps decent cruising speed, emphasizes Dørum report .
– But growth is unevenly distributed. Growth economies are growing three times as fast as developed countries, he adds.
Clearly dichotomy
The brokerage estimates that the value creation in emerging economies will grow by four percent this year, compared with growth of moderate 1.4 percent in industrialized countries. This trend will also continue in the coming years, according to broker house forecasts.
– Soon eight years after the financial crisis, developed countries as a whole still characterized by availability, low inflation and historically low interest rates. These colors also the political landscape, which appears more and more fragmented.
Dørum points out that the outcome of the British referendum earlier this year is a picture of this.
– Brexit was a work-related accidents, but also an expression of a rising popular frustration in many countries, a frustration that can send globalization in reverse. Growing inequality is part of the same picture, writes Dørum.
– Our hovedsyn remains that globalization and associated strong growth in emerging economies, will continue.
Ni hazards
But “a lot can still go wrong,” says chief economist and lists nine hazards:
China: According Dørum still represents progress in China the biggest risk to the world economically speaking.
chief economist pointed out that the combination of high debt and lower corporate earnings will dampen business investment, while banks’ losses will continue to increase. Authorities will be able to intervene by recapitalize banks and by increasing investments through state enterprises to sustain the economy.
– The risk of a banking crisis is not insignificant, but we believe that the government has the capacity to prevent this happens over the next few years, writes Dørum.
growth in advanced economies may disappoint further: Although DNB Markets has reduced growth in industrialized countries compared with the forecast at the beginning of the year, see broker house economists for the possibility of even lower growth.
– An obvious risk is therefore that growth in industrialized countries can continue to disappoint in that missing investment appetite and / or innovation or reform will keep potential growth down, writes Dørum.
Greater economic inequality within countries: Dørum points out that while disparities between countries have declined since the 1980s, has disparities within countries increased.
– Inequality can hinder development, especially through more limited access to education, points out Dørum.
– A weaker economic growth for large groups is probably also a major cause of the political fragmentation in particular has happened Following the financial crisis. Addressed there, the risk more instability and globalization reverse, writes Chief Economist.
Political uncertainty in the short term: DNB Markets fear the consequences of a victory for Donald Trump in the US presidential elections 8. November.
– if Trump was going to win, you trade and security policy be revised in more nationalistic direction. This may provide even less trade growth than now and more global conflicts, writes Dørum.
Brexit: British economy and politics will last for several years be characterized by uncertainty about how the British should deal with the EU and other countries that EU membership today regulates trade.
– This uncertainty may have delayed investment and relocation of activity, stating Dørum.
EU and the euro zone is still struggling: Declining growth, high unemployment and cuts in welfare benefits have characterized the EU over the past eight years.
Dørum notes that this has led to many voters have gone to populist parties on both wings, which weakens management capability in each country, but that can also weaken the cooperation between the two countries, since the wing portions according to the chief economist is more isolationist.
– Brexit was a work accident in a very EU-skeptic countries and will unlikely to happen in other EU countries at first, but it has fueled the separatists also in other EU countries, writes Dørum.
Larger geopolitical tensions: Russia’s relations with the West is characterized by a much higher voltage level than in the years following the fall of the wall, with nascent rearmament on both sides.
– Although open armed conflict seems virtually inconceivable, the risk of accidents increased significantly, says Dørum.
at the same time China out to translate economic power into political power in Asia.
– Also here it can happen accidentally.
Besides the Arab spring in the Middle East been superseded by the Dørum characterizes as “a seemingly endless bloody summer.”
– This hit surrounding land through record refugees, more terror and potentially through the oil market, writes Dørum.
Crude: This is still the most important risk factor for activity in the Norwegian economy. DNB Markets expects better balance between supply and demand in the oil market will pull the price up to over 55 dollars a barrel in the fourth quarter of this year and further to $ 70 barrels a year later.
– While weaker global growth could drag price down, the supply-side disturbances pull it up. But in the longer term is also an obvious downside risk still focus on renewable energy and rapid technological development in this area, writes Dørum.
Prolonged low interest rates: This creates the risk of bubbles in financial assets, says DNB economist.
– the prices of government bonds are stretched far, the same applies to property prices in several places. Historical experience suggests that this may give rise to deep lows later, writes Dørum.
Possibility of positive surprises
Dørum believes there may also be room for positive surprises ahead and have identified four possible risks on the upside:
US may surprise positively: the growth has been weak, which, according to chief economist caused by weak productivity growth.
– But when the labor market now is tightening the companies may be forced to utilize manpower more efficiently and to raise productivity and growth, ceteris paribus, writes Dørum.
Developed countries have more going on: the investments are still abnormally low in developed countries, emphasizing DNB economist.
– progressively less debt, more solid banks and less uncertainty can lead to stronger investment appetite and thus more growth, both in the short and long term, notes chief economist.
Large parts of the world has more going on: Increased trade and structural and institutional reforms could trigger a huge upside potential, believes Dørum.
– Something new China we do not, but collectively can the many growth economies represent major growth impetus, he writes.
inflation may come up again: prices will be according Dørum restrained by low energy and commodity prices, globalization, technological advances and probably also an increase in the work lead part of the population in industrialized countries.
the negative contribution from energy and commodity prices, according to broker housing forecasts could be replaced by a positive. At the same time globalization currently uphill and an aging population will gradually lead to a lower proportion of working age.
– This can take up inflation. Technological development is of course a wild card, both ways, anyway, writes Dørum.
DNB growth forecast
Gross Domestic Product (GDP), the percentage change from the previous year.
| Country / area | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
| World | 3.4 | 3.0 | 2.9 | 3.2 | 3.4 | 3.4 |
| US | 2.4 | 2.4 | 1.5 | 1.7 | 1.9 | 2.1 |
| Canada | 2.5 | 1.1 | 1.5 | 1.8 | 2.0 | 2.0 |
| Brazil | 0.1 | – 3.8 | – 3.5 | 0.5 | 1.5 | 2.0 |
| Eurozone | 0.9 | 1.7 | 1.5 | 1.2 | 1.3 | 1.2 |
| Germany | 1.6 | 1.5 | 1.7 | 1.4 | 1.1 | 1.1 |
| France | 0.6 | 1.3 | 1.4 | 1.4 | 1.3 | 1.5 |
| Italy | – 0.3 | 0.8 | 0.9 | 1.0 | 0.8 | 0.8 |
| Spain | 1.4 | 3.2 | 2.8 | 1.8 | 1.8 | 1.6 |
| Finland | – 0.7 | 0.4 | 0.9 | 1.2 | 1.0 | 1.3 |
| Estonia | 2.9 | 1.1 | 2.0 | 3.0 | 3.0 | 3.0 |
| Latvia | 2.4 | 2 , 7 | 2.3 | 3.5 | 4.0 | 3.0 |
| Lithuania | 3.0 | 1, 6 | 2.8 | 3.2 | 3.5 | 3.0 |
| United Kingdom | 3.1 | 2,2 | 2.0 | 0.8 | 1.2 | 1.8 |
| Sweden | 2.3 | 4.1 | 3.2 | 2.2 | 1.9 | 1.8 |
| Denmark | 1.3 | 1.2 | 1.0 | 1 , 5 | 2.0 | 1.8 |
| Poland | 3.3 | 3.6 | 3.5 | 3, 5 | 3.5 | 3.6 |
| mainland Norway | 2.3 | 1.0 | 0.8 | 1 , 4 | 1.9 | 2.1 |
| Switzerland | 1.9 | 0.9 | 1.0 | 1, 4 | 1.6 | 1.7 |
| Russia | 0.7 | – 3,7 | – 0.6 | 1 , 0 | 1.5 | 1.5 |
| China | 7.3 | 6.9 | 6.8 | 6, 6 | 6.3 | 5.9 |
| India | 7.2 | 7.6 | 7.6 | 7.5 | 7.5 | 7.5 |
| Japan | 0.0 | 0.5 | 0.5 | 0.7 | 0.6 | 0.6 |
| South Korea | 3.3 | 2.6 | 2.6 | 2,7 | 2.8 | 2.8 |
| Other countries | 3.2 | 2.6 | 2.4 | 3,1 | 3.6 | 3.7 |
| The industrial | 1.6 | 1.8 | 1.4 | 1.3 | 1.4 | 1.5 |
| Emerging | 4.7 | 3.9 | 4.0 | 4.6 | 4.8 | 4 , 7 |
| Norway’s trading partners | 1.6 | 2.2 | 1.8 | 1.4 | 1.5 | 1 , 5 |
Source: DNB markets
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