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Global Economy Weakens Short Term But There Is Light In 2015

Published 11/14/2014, 02:05 AM
Updated 05/14/2017, 06:45 AM

Summary and outlook

Sentiment and leading indicators currently show a murky picture of the global economy. In the US, signals are mixed as ISM is still strong but demand data has weakened somewhat. Euro short-term indicators are still weak but rising real money growth still underpins the case for recovery next year. In Japan, indicators are a bit mixed but overall point to stronger growth following the weakness after the VAT hike. Chinese production is soft and still signals some downside risk to PMI.

Short term, we expect the soft picture to continue with a rising risk of a significant decline in US ISM while euro surveys stay weak. There is also still a risk of a further decline in Chinese PMI. However, looking into 2015, we look for a bottom in the global cycle during Q1 with a moderate recovery in the following quarters.

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