27 Jun 2013
Flash: Macro views in focus following global growth acceleration – Goldman Sachs
FXstreet.com (New York) - Global asset markets have re-priced substantially following hawkish policy signals and perceived changes in the global economic outlook, notes the Economics Research Team at Goldman Sachs.
Overall, the consensus has built around the expectation that global growth will accelerate going into 2014, which should push output gaps in a positive direction. However, there is less clarity on where they currently stand or how they are likely to evolve. That is key to forecasting policy paths and market reactions, as it allows us to anchor macro views when markets fluctuate. So we look here at output gaps in 40 countries, representing more than 90% of global output.
Global economy still has plenty of room to grow
According to the team, “We find that the global economy has plenty of ‘room to grow’, especially in DMs, but also in some EMs. Our estimates point to gaps of around -2.4% for the world, -3.4% for DMs and -1.0% for EMs. These estimates account for possibly weaker potential growth rates after the crisis. During the next 2-3 years, output gaps are likely to close in EMs as cyclical weakness recedes, and go half-way towards closing in DMs. But starting levels and expected closing speeds differ markedly across countries.”
Overall, the consensus has built around the expectation that global growth will accelerate going into 2014, which should push output gaps in a positive direction. However, there is less clarity on where they currently stand or how they are likely to evolve. That is key to forecasting policy paths and market reactions, as it allows us to anchor macro views when markets fluctuate. So we look here at output gaps in 40 countries, representing more than 90% of global output.
Global economy still has plenty of room to grow
According to the team, “We find that the global economy has plenty of ‘room to grow’, especially in DMs, but also in some EMs. Our estimates point to gaps of around -2.4% for the world, -3.4% for DMs and -1.0% for EMs. These estimates account for possibly weaker potential growth rates after the crisis. During the next 2-3 years, output gaps are likely to close in EMs as cyclical weakness recedes, and go half-way towards closing in DMs. But starting levels and expected closing speeds differ markedly across countries.”