The latest activity “nowcasts” shown in detail below indicate that the global economy has continued to slow down more than consensus forecasts projected, though forecasters continue to believe that this slowdown will prove temporary.
Data in the US have so far failed to improve, after a very disappointing first quarter of 2015. US activity growth is now estimated at 1.8 per cent, down from 2.0 per cent last month.
Japanese activity in both the industrial and retail sectors has also been weak, with the model’s estimate of activity growth now close to zero, while the UK seems to have slowed to about 1.8 per cent in the run up to next week’s General Election.
Chinese activity dipped sharply last month, and the estimated rate of growth is now 5.3 per cent, well below the government’s 7 per cent target for the 2015 calendar year. Other Asian economies have also slowed, partly due to the effect of the US West Coast ports strike on their exports.
The sole bright spot is the eurozone, where activity growth has improved slightly further to 1.8 per cent, following an encouraging pick-up earlier in the year. The gap between US and eurozone growth has, for now, disappeared completely.
Overall, the growth rate of the global economy has therefore slowed further, according to our models. Our estimate of activity growth in the major advanced economies plus China, which we use as a proxy for global activity, has dropped to 3.0 per cent at the end of April, from 3.7 per cent a month ago. This measure of global activity has now broken below the roughly 4 per cent rate that had been established since mid 2014.
The extent of this growth slowdown has surprised economic forecasters, given the boost to global growth that should have stemmed from lower oil prices, and the aggressively easy policy stance in all the advanced economies. Activity growth needs to recover markedly in the next few weeks if a generalised downgrade to global growth forecasts for the 2015 calendar year is to be avoided. Read more