√
Schroders Economic Infographic July 2015
The ‘square root’ recovery
4.6%
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,
of 2.5%
UK labour
shortages
3.3%
2.5%
2.2%
08
2.6% 2.6%
UK is running out
of spare capacity
2.9%
Indicators point to a
shortage of labour
+ early signs of
wage inflation
-1.3%
09 10 11
2012 - 2015
12
Year
13
14 15
Firms may have to
compete to recruit
+ retain staff
1
16
2
3
2016
This should result
in accelerated
wage growth
However, we expect a continued
recovery in Europe + Japan,
as well as steady growth in the US.
Global slowdown is largely
accounted for by weaker
demand in the West for
emerging market exports
%
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 February 2016
Looking for a global locomotive
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
A pay-as-you-go bailout
Eurozone leaders have reached an agreement
over a third Greek bailout
September
GREXIT
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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