Per Reuters the World Bank has announced that it has cut its global growth projection for 2016:
The World Bank on Wednesday cut its global economic growth forecast for 2016, saying the weak performance of major emerging market economies will tamp activity overall, as will anemic showings from developed countries such as the United States.
Global growth should accelerate to 2.9 percent this year from 2.4 percent in 2015, the bank said, but that still represents a downgrade from its June forecast for 3.3 percent growth.
The bank raised particular concern about the flagging performance of top emerging economies.
Much of the lower projection is due to predictions of slower growth for BRIC countries:
Real gross domestic product in Russia could shrink at a 0.7 percent annual pace this year, it said. In June it had forecast 0.7 percent GDP growth for 2016. The bank estimates the Russian economy shrank by 3.8 percent in 2015.
In Brazil, GDP is forecast to decline by 2.5 percent in 2016 compared with an earlier estimate for growth of 1.1 percent, the World Bank said. The Brazilian economy likely contracted at a 3.7 percent rate in 2015.
China GDP growth was estimated to slow to 6.7 percent in 2016 from an estimated 6.9 percent in 2015. In June the bank had estimated 2016 growth of 7.0 percent.
The South African economy should grow at a modestly faster rate in 2016 than last year – 1.4 percent compared with 1.3 percent – but substantially slower than the 2.1 percent growth forecast in June.
Of that group, India was the only one expected to see notable improvement in economic performance from 2015 – advancing at a 7.8 percent rate in 2016 versus 7.3 percent in 2015. But even there, the bank nipped its 2016 estimate by 0.1 percentage point from its earlier forecast.
but they’ve cut the growth they’re predicting for the United States as well:
The U.S. economy should grow by 2.7 percent, down from an earlier estimate of 2.8 percent but up from 2015’s 2.5 percent.
I think their prediction of eurozone growth (1.7%) is unduly rosy.
Slow growth in the United States will make running for a third Obama term an even tougher sell than it might otherwise be so Sec. Clinton’s narrow path—running on her experience with the Obama Administration without tying herself to it too tightly or alienating Obama voters she needs to turn out to support her—razor thin.
I assume anyone who is interested has seen the latest manufacturing reports. Orders down, inventory to sales up. Not good. One of my partners ran into this character Cramer in an airport and spoke briefly with him. Cramer was pooh-poohing manufacturing because it’s such a small fraction of GDP now. He, like many, forget that it has a disproportionate effect on incomes and spending.
I assume people have also seen the declining auto numbers, creaking and groaning in housing and sliding corporate earnings. Our recent portfolio review would not give one any hope. I really don’t know what the world bank guy is thinking. Even the perms bulls at JPMORGAN are calling down forecasts.
Freight shipments in all modes are down, commodity prices are down, and none of the central banks interventions have had any effect on inflation. It seems pretty clear that the world economy is in recession, and has been for sometime. If it were not for QE, we would be in a fullblown deflationary era with depression in the wings.