Global growth: 2.9% in 2016, to tick up to 3.0% in 2017 - Wells Fargo

According to analysts from Wells Fargo, global growth will continue below the long-run average. They see inflation at 3.2% in 2016 and at 3.4% in 2017.

Key Quotes:

“Global industrial production (IP) growth continued to grow at a subdued pace through the first half of 2016. Global IP has remained below 2.0 percent for 10 consecutive months, on a year-over-year basis, a trend not seen since 2012. This discouraging trend coincides with the well below-average growth in world export volumes, which have slipped into negative territory year over year.”

“Despite generally dovish central banks in both developing and advanced economies, deflation continues to be a growing concern. Negative interest rates are no longer an anomaly as several European central banks and most recently Japan are sub-zero. The ECB’s current rate of 0.00 percent and the BOE’s 0.25 percent policy rates could potentially be next as the negative effects of Brexit become more pronounced and weigh on growth.”

“Developing economies continue to face challenges, including subdued commodity prices and retreating global export growth. Central banks in these countries are hesitant to cut interest rates as past bouts of depreciation have led to run-away inflation, which subsequently weighed on economic growth.”

“We expect global growth this year to grow at 2.9 percent and tick up to 3.0 percent in 2017, both rates well below the long-run average of 3.5 percent. Likewise, we expect global inflation to be 3.2 percent in 2016, before increasing 3.4 percent in 2017”.