60 seconds on the Global Economy
In this video Keith Wade shares his views on the global economy.
The global economy is very strong at the moment – we’re seeing very strong activity indicators coming through. We are seeing one or two signs that global growth may be beginning to peak in terms of the growth rate; the improvement in global trade which we saw in the summer appears to have levelled out and there are some signs that import growth is slowing down in places like China, so we’ll be watching that very carefully.
Overall, global activity remains good and the emerging markets are now showing a bit of strength that is coming through.
The main threat to global trade that we’ve seen recently is coming more from protectionism; Donald Trump has announced tariffs on washing machines and solar panels, and there are concerns that this could be the thin end of the wedge now that we will see tariffs increased elsewhere.
One of the scenarios we have is that protectionism does increase and that would cause quite a lot of stagflation in the world economy. So that is something we are very aware of.
In the meantime, the dollar has continued to weaken, giving American companies an advantage through a cheaper dollar. We think that the dollar overshot last year and has gradually been adjusting.
The new factor is where the ECB will take interest rates – clearly as the Eurozone has improved, people have begun to expect interest rate increases in the Eurozone, and that at the moment is the driving factor for the dollar.
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