Wall Street economists see global growth cresting, not collapsing
The International Monetary Fund conducts its semi-annual health check of the world economy this week with investors fretting global growth is starting to sag after accelerating the most since 2011 last year.
Despite the soft start to the year and ongoing trade tensions, economists on Wall Street and beyond are sticking to forecasts for another solid economic expansion in 2018 while acknowledging the risks of slippage have mounted, Bloomberg reported.
Here’s a rundown of what economists at major banks are saying in reports and interviews about the outlook. The forecasts are for global output in 2018 and are mostly in terms of purchasing power parity, the metric favored by the IMF which currently anticipates an expansion of 3.9 percent.
Goldman (4.1 percent) Sachs Group Inc.
There have been negative surprises, but we’re not that overly concerned. The bottom line is that the global growth numbers have moderated, but we’re not rolling over as much as some of the data suggest. — Jari Stehn, economist, April 3.
Citigroup Inc. (3.4 percent at current exchange rates)
Recent growth and inflation data seem to have undershot expectations. Recent developments have sharpened our risk outlook. We continue to see small upside risks to our 2018 growth, inflation, and monetary policy forecasts; but downside risks have risen. This is largely the result of growing geopolitical risk, and the increasing importance of the weak dollar to global (and especially emerging market) growth. — Willem Buiter, special economic adviser, March 26.
Jpmorgan Chase & Co. (3.9 percent)
While surprised by recent news we remain comfortable that 2018 will produce strong and synchronized global growth. However, for the first time in a year, activity and survey readings are challenging our forecast. — Bruce Kasman, chief economist, April 13.
Barclays Plc (4.2 percent)
Escalation of the Us-china dispute has entered a new phase, but ongoing trade war uncertainty leads us to recommend shifting away from risk assets. Recent declines in global manufacturing confidence and a moderation in US job gains raise risks to our growth view. But sentiment is still at historically healthy levels, US earnings are strong, and China growth has accelerated, keeping the global expansion intact in the second quarter. — April 6 report.
Deutsche Bank AG (3.9 percent)
Growth is slowing from a relatively high level. We’re worrying much more about overheating than a slowdown. The big tailwind for global growth will continue to be the fiscal expansion in the US. — Torsten Slok, chief international economist, April 9.