Global Economy Has Taken Some Blows But Looks In Good Shape

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Written By Mahmoud Sarvari

Despite some election shocks on both sides of the Atlantic, the global economy looks in a reasonable shape for the summer, according to a review by international banking giant Credit Suisse.

The bank considers business confidence is high and inflation will settle  over the coming months.

The bank has looked at regional economies and decided growth is the more likely option.

In the USA, all eye are on the Federal Reserve. The central bank is expected to hike interest rates in June and possibly again in September and December, says the Credit Suisse research.

The increases are likely to be small, taking the rate to a possible 1.75% by the end of the year.

Brexit dominates European agenda

GDP should shift up, despite conflicting hard and soft economic data – with statistics disappointing, but sentiment riding high.

Brexit dominates the European agenda. Presidential elections in France are over, taking away much uncertainty, but the UK election result will not be known until June 9.

Emanuel Macron’s win was a blessing for ardent European federalists and an overwhelming jolt for the populist wave ridden into the US presidency by Donald Trump.

Major economies in Germany and Spain are dragging along other headliners, such as France and Italy.

EU inflation is expected to rise in line with better growth, leaving the European Central Banker sitting on their hands while they watch how the scenario plays out.

Oil price dilemma

Japan has much more of a problem, as the only major economy in the grip of deflation.

Although the stop-start economy appears to be picking up, deflation is a drag on wages and prices.

Credit Suisse expects the Chinese economy to grow by at least 6.7% this year and a surprise return for Russia, where economic data has shown some signs of improvement recently. The price of oil continues to be an issue as OPEC is expected to maintain restricted output for another six months in order to maintain pump prices.

“The global economy remains robust. Nevertheless, the US Federal Reserve is still the only major central bank that is tightening its monetary policy,” says the report.