Schroders Economic Infographic Mar 2015
Global growth
Macro risks
Europe
Acceleration in advanced economies
offset by weaker growth in emerging
markets
Probability analysis of future scenarios
Recovery
resumes as
political risk
subsides
JAPAN
0.0%
1.6%
• Inflation in the advanced world is
expected to record its lowest rate for five
years in 2015, but picks up in 2016 as the
impact of lower energy prices fades.
• We do not expect sustained deflation in
the eurozone or in the wider global economy.
In the US we expect the Fed funds rate to rise to 1.25% by
end 2015 and then peak at 2.5% in 2016.
Emerging
economies
Oil producers
Decline in oil prices
favours advanced over
emerging economies
Advanced
economies
Net oil consumers
Feeds through quicker as
government does not attempt to
fix the price through subsidies
65%
6%
as
el
ine
UK - growth expected
to slow to 2% in 2016
on back of weaker
investment and fiscal
tightening that will result
after May’s election
Greek crisis
fading
bl
e
Def
lat
i
3.7%
nger
er for lo
low
Oil
4.2%
2015
1.3%
Region
appeared to
shake off
Ukraine/Russia
concerns
3%
Growth in
developed markets
offsets lower growth in emerging
markets
Other
ru
ian
s
s
tio
Ru
fla
ag
St
Europe is hit by
disruption to energy supply
A lower
oil price
Ongoing euro
weakness
Increased
banking
activity
Lower interest
rates
BRICs
Worries: Fed rate rise > hike > trigger EM corporate defaults & economic slowdown
CHINA
Growth outlook: unchanged
BRAZIL
Growth outlook: downgraded
RUSSIA
Growth outlook: downgraded
INIDA
Growth outlook: unchanged
6.8%
6.5%
-0.6%
0.9%
-4.9%
-0.4%
7.5%
2015
2016
2015
2016
2015
2016
2015
7.8%
GDP growth
EMERGING
MARKETS
ationary
1.3%
Defl
1.1%
6%
4%
Financial
system
and
demand
collapse
in China
ing
EUROZONE
Oil
price
falls to,
and stays
at, $30
per barrel
l China hard lan
d
3.2%
4%
5%
pira
2.4%
EZ
ry s
USA
Economy
falls into
a slump
na
2015
om
tio
2014
G7 B
o
2016
1.6%
ary
4%
B
REGION
3%
ti o n
fla
2014: 2.7%
n
usterity
ns a
ndo
ba
a
EZ
m
2015: 2.8%
Refla
nary
atio
na
ry
2016: 3%
fl
Re
de
Global
activity
grinds
structurally
lower
on
Secu
ar
lar
y
sta
gn
at
io
Global growth
Advanced economies grow
in response to loose monetary policy
To head off a
political backlash
• Cheap oil + overcapacity + slower
growth = lower inflation
• Further monetary easing expected
• Petrobras scandal, fiscal consolidation,
and threat of electricity rationing
• One-off impact of electricity tariff and
currency weakness
• Further rate hikes from the central bank,
with potential cuts in Q3-Q4 as growth sours
• Weaker oil price hits growth through
reduced exports and fiscal support
• Inflation shooting up thanks to
currency weakness and sanctions
2016
• Change in GDP calculation investment growth remains weak
and reforms are needed
Important Information: Any security(s) mentioned above is for illustrative purpose only, not a recommendation to invest or divest. This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Opinions stated are matters of judgment, which may change. Information herein is believed to be reliable,
but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy. Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You
should remember that the value of investments can go down as well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas investments to rise or fall. For risks associated with investment in securities in
emerging and less developed markets, please refer to the relevant offering document. The information contained in this document is provided for information purpose only and does not constitute any solicitation and offering of investment
products. Potential investors should be aware that such investments involve market risk and should be regarded as long-term investments. Derivatives carry a high degree of risk and should only be considered by sophisticated investors.
The fund is authorized by the SFC but such authorization does not imply official approval or recommendation. Schroder does not provide any securities or investment products for offer, solicitation or trading within The People’s Republic of
China (PRC). Should illegitimacy arise thereof, contents of this document shall not be construed as an offer or solicitation or trading for such securities or products. All items mentioned herein are sold through financial products issued by
commercial bankers in the PRC under regulations by the China Banking Regulatory Commission (CBRC). Investors should read the relevant documents clearly before invest in the mentioned funds. Please consult the relevant commercial
bankers in the PRC and/or professional consultants if necessary. This material including the website has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.
Schroder Investment Management (Hong Kong) Limited
Level 33, Two Pacific Place, 88 Queensway, Hong Kong
Telephone +852 2521 1633 Fax +852 2530 9095
0315/CNEN