The global economy in pictures Jan 2016
2015 in review
Spring
Summer
•ECB* announce QE* of €60 billion
per month
•Weakness in China prompted
monetary easing and
fiscal stimulus
•Strength in US shale gas led to
a fall in commodity prices
•Panic after China equity
bubble popped leading to
equity sell-off
•Further worries after authorities
devalue CNY
A desynchronised
Winter in 2015
Winter
Autumn
•China fears spread to
Emerging Markets - as
commodity prices fall - and
the US, leading the FED against
raising interest rates
Historic agreement on
climate change, but will it
change the world?
Fears reduced as
government announced
fiscal stimulus measures
and PBoC* announce
monetary policy easing
BoJ* refrained from
increasing QQE* despite
disappointing economic
growth, but did keep
policy loose
ECB* disappoints investors
with small increase
in stimulus
FED* finally raises rates
resulting in strong rally in
the USD
2015 will probably be remembered for the lacklustre performance of markets, and the uncertainty caused by central banks’ actions (and inactions)
Five lessons from 2015
Rumours of Chinese
market reforms were
greatly exaggerated
Oil producers
were resilient as oil
prices stayed low
US rates were
able to rise without
causing mayhem
Greece forced
to take bailout
package
ECB* President loses
popularity after refraining from
adding monetary easing
Political uncertainty
Five themes for 2016
China enters the
currency war
Services vs.
manufacturing split
The desynchronised
cycle continues
Emerging markets
continue to struggle
Gradual depreciation
of CNY challenges
competitors
International sectors
likely to become
pressurised, domestic
service sector should
continue to thrive
Monetary tightening in
the US, loosening policy
elsewhere
Pressure on Emerging
Markets commodity prices.
Investors may be deterred by
potential downgrades and
an increase in defaults
US presidential election year
leading to Trump presidency?
UK referendum on EU
membership leading to Brexit?
Uncertainty will weigh heavy
on investment decisions
*ECB - European Central Bank, *FED - Federal Reserve, *QE - Quantitative Easing, *QQE - Qualitative and Quantitative Easing, *PBoC - People’s Bank of China,
*BoJ - Bank of Japan
Source: Schroders as at January 2016.
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