July 2015
of 2.5%
The recovery in growth after the global financial crisis resembles the square root sign
Following the initial collapse & rebound, global growth has flattened at a steady, albeit sub-par rate,
2012 - 2015
Global slowdown is largely accounted for by weaker demand in the West for emerging markets exports
2.2%
4.6%
3.3%
2.5%
2016
2.6% 2.6%
2.9%
-1.3%
08 09 10 11 12 13 14 15 16
However, we expect a continued recovery in Europe + Japan, as well as steady growth in the US.
UK is running out of spare capacity
2
1
3
Indicators point to a shortage of labour
+ early signs of wage inflation
Firms may have to compete to recruit
+ retain staff
This should result in accelerated wage growth
2.9% global growth in 2016
2016 = EM
exports
%
BoE relaxed: expected productivity recovery
= no need to hike interest rates
We believe the first interest rates hikes will appear in Febuary 2016
US no longer the global locomotive it once was:
The economy is not in a position to continue as a driver of global growth
Just escaping deflation
Relying on currency devaluation to reflate activity
Too Small, represent
10 % of global activity
India as global driver is slightly optimistic
It is difficult to see who may take responsibility
The absence of a global locomotive means that we are unlikely to break with the square root recovery
•
Subdued growth
•
Ageing workforce
•
Inflationary pressure
•
Interest rates rise
Eurozone leaders have reached an agreement
over a third Greek bailout
Going forward, there will be a series of reforms
to avoid a grexit
2015
An agreement will
hopefully be reached by September 2015

Source: Schroders as at July 2015.
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