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What's Happening? - Economics

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Please see below selected recent economics-related intelligence. This is a synthesis of major recent developments at corporates, business schools, thinktanks, media, commentators, and other key influencers.


Q3 (July-August-September) 2016


June 2016


  • PwC's Economics team launched its monthly Global Economy Watch for June. This month, PwC economists indicate that productivity growth in Ireland and Spain – the top performing peripheraleconomies in the Eurozone – has outstripped that in Germany, France and the Netherlands. But sectoral fortunes have been mixed, with PwC analysis showing that in several Eurozone economies, productivity in the manufacturing sector has grown at a relatively rapid rate. Meanwhile, figures reveal that the eurozone economy grew faster than the US in the first quarter of 2016. But PwC analysis shows that the economic - and to a greater extent, the labour market - recovery has been uneven. For example, the range of unemployment rates in the eurozone at this stage of the recovery is the highest it has ever been compared to past recoveries.



  • The United Nations cut its global growth forecast for 2016 to 2.4% from its forecast 2.9% in December; however it is attributed largely to the downward revisions for Africa. Global growth is projected to rise marginally to 2.8% in 2017, remaining below pre-crisis trends. The protracted period of slow productivity growth and weak investment weigh on the longer-term potential of the global economy.

  • In its latest twice yearly global assessment, the OECD warned that the world economy is “stuck in a low-growth trap”. The organisation said monetary policy alone could no longer be relied on to deliver growth and governments should be using the fiscal tools at their disposal, such as increases in investment spending, to stimulate demand. It also pointed to several downside risks to global growth, the most immediate of which would be if Britain votes to leave the European Union in a referendum on June 23rd.


See also:



May 2016





  • PwC's own Economics team meanwhile launched its monthly Global Economy Watch, for May 2016. Our economists suggested that as countries struggle to reach their economic potential, infrastructure could be the key to boost growth. They point out that eight years after the financial crisis, many large economies continue to have sizeable negative output gaps - indicating the presence of spare capacity in their economies.





April 2016



  • Corporate borrowers across the world have defaulted on $50bn of debt so far this year as the number of delinquent companies accelerates at its fastest pace since the US emerged from the financial crisis in 2009. The sharp decline in commodity prices, spurred by slowing global growth and lacklustre demand for base metals and crude, has weighed on oil and gas producers and miners. Nearly half of the defaults have occurred in these two industries, with companies such as Peabody Energy, Energy XXI and Midstates Petroleum all missing interest payments.



  • The World Trade Organisation revised its 2016 global trade forecast downward by more than one percentage point, warning that a slowdown in China and broad market volatility continue to threaten growth. In September, the WTO estimated that global trade would rise by 3.9% this year, but it now sees a figure of 2.8%, the same rate as 2015 and the fifth year in a row it has been below 3%




  • Global economic growth was running at its weakest for over three years in the first quarter, according to Purchasing Managers’ Index (PMI) data. The JPMorgan Global PMI rose to 51.3 in March, but the latest reading represented only a minor improvement on February’s 40-month low of 50.8. At 51.6, down from 53.1 in the fourth quarter, the average PMI reading for the first three months of the year was the weakest calendar quarter since the end of 2012.



  • PwC's own Economics team launched its monthly Global Economy Watch for April. Our economists argued that subdued growth in some emerging markets and low commodity prices have led to renewed interest in the link between governments and the financial sector. This has also been an important issue on the global policy agenda as policymakers have tried to loosen these ties.






March 2016



  • Oxford Economics' growth forecast for 2016 was steady in March at 2.3% but the forecast for 2017 has been cut again, to 2.7% from 2.9%. The near-term growth outlook has been supported by a decent rally in financial markets. Since mid-February, world stocks have gained around 8% and a number of key commodity prices - including oil - have also risen. Another supportive trend is still healthy consumer demand in advanced economies including the US and eurozone. Although there has been some slippage in consumer confidence, it has been modest compared with either 2012-13 or 2008-09. So overall, the global economy still looks likely to avoid recession and strengthen a touch next year, but for OE risks to the outlook remain skewed to the downside.







  • PwC's own Economics team meanwhile launched the monthly Global Economy Watch for March. This month, our economists suggest that once again the global economy faces a dangerous cocktail of risks including slowing growth in China, a strong dollar, and low commodity prices. But this time, the emerging market economies look the most vulnerable, while advanced economies are still struggling to escape the low economic growth environment almost a decade on from the global financial crisis.




February 2016





  • The OECD published its Interim Economic Outlook, 'Elusive global growth outlook requires urgent policy response'. Highlights:


  • The OECD projects that the global economy will grow by 3 percent this year and 3.3 percent in 2017, which is well below long-run averages of around 3¾ percent. This is also lower than would be expected during a recovery phase for advanced economies, and given the pace of growth that could be achieved by emerging economies in convergence mode.
  • The US will grow by 2 percent this year and by 2.2 percent in 2017, while the UK is projected to grow at 2.1 percent in 2016 and 2 percent in 2017. Canadian growth is projected at 1.4 percent this year and 2.2 percent in 2017, while Japan is projected to grow by 0.8 percent in 2016 and 0.6 percent in 2017.
  • The euro area is projected to grow at a 1.4 percent rate in 2016 and a 1.7 percent pace in 2017. Germany is forecast to grow by 1.3 percent in 2016 and 1.7 percent in 2017, France by 1.2 percent in 2016 and 1.5 percent in 2017, while Italy will see a 1 percent rate in 2016 and 1.4 percent rate in 2017.
  • With China expected to continue rebalancing its economy from manufacturing to services, growth is forecast at 6.5 percent in 2016 and 6.2 percent in 2017. India will continue to grow robustly, by 7.4 percent in 2016 and 7.3 percent in 2017. By contrast, Brazil’s economy is experiencing a deep recession and is expected to shrink by 4 percent this year and only to begin to emerge from the downturn next year.
  • The Interim Economic Outlook calls for a stronger policy response, changing the policy mix to confront the current weak growth more effectively. It points out that sole reliance on monetary policy has proven insufficient to boost demand and produce satisfactory growth, while fiscal policy is contractionary in several major economies and structural reform momentum has slowed.’



  • The Ifo Index for the world economy dropped from 89.6 points to 87.8 points this quarter, drifting further from its long-term average (96.1 points). While assessments of the current economic situation brightened marginally, expectations were less positive than last quarter. The sharp decline in oil prices seems to be having little overall positive economic impact.



  • The current global economy is unpredictable and "disturbed" as a result of transformation. The New Yorker has argued that we may be entering a "post-post-Davos" model. Meanwhile, former Chief Economist at UBS, George Magnus recently highlighted the "varying degrees of turmoil" in an editorial for Prospect.




January 2016



  • EY looked at the disruptive potential of the sharing economy in 'Get ready: open to sharing means open for business'. EY said, that sharing economy business models may change the very nature and structure of the corporation. The potential for the sharing economy to disrupt most industries, globally, is unprecedented. Sharing economy business models have been born into a world wholly unprepared for them. Many existing rules don’t apply. But, ready or not, when a sharing economy opportunity knocks on your door, you’ll need to know how you should answer.







  • PwC's own Economics team launched its monthly Global Economy Watch (GEW) for January 2016. This being the start of the year, our economists focused on predictions for 2016.




December 2015



  • Based on historic patterns of the business cycle, the current expansion has lasted longer than the average gap between recessions. It's prudent to start thinking about where the next recession might come from and emerging market corporate debt is a likely contender, warned the EIU. Ultra-low interest rates in the US, EU, UK and Japan have made financing conditions pretty easy for a lot of emerging market corporates in recent years, and many have taken the chance to borrow on international markets to get access to this cheap finance. In 2010-12, strong local currencies in many commodity exporters, like Brazil and Indonesia, meant that much of this borrowing was in US dollars. Companies in Latin America (especially Brazil), Turkey and South Korea are looking particularly exposed. As interest rates are now on the way up in most countries, and the US dollar is going up against most other currencies, the cost of servicing these loans is rising, and there could be some trouble in 2016. There is less to worry about in China, where little debt is denominated in foreign currency, and much lending is to and from entities that are ultimately state-backed.



  • The European Commission published its new Circular Economy Package intended to stimulate Europe's transition towards a circular economy to boost global competitiveness, foster sustainable economic growth and generate new jobs. The package consists of an EU Action Plan, a timetable setting out when the actions will be completed and a number of legislative (revised) proposals on waste, setting recycling targets. Press release. The legislative proposals were cautiously welcomed by MEPs, but they argued that on waste recycling, reducing food waste and landfill, the proposals aim too low (in comparison with the targets set in the previous proposal). Reactions from the political groups range from disappointment (liberals) to “much ado about nothing” (Christian Democrats). According to a Brussels journalist, it seems unlikely that this new package will come into law any time soon given that MEPs have vowed to push for higher targets, and member states are expected to struggle to reach the Commission's proposed targets. Some reading: 'PwC Lessons Learned – Going Circular: Towards 100% reuse and recycling'.



  • The latest edition of PwC's Global Economy Watch looked at whether consumers are going to behave more like Santa and less like Scrooge over the coming few months. Retail turnover suggests good news for retailers – spending on clothes, communications equipment and leisure activities is now growing faster than average spending, and the outlook is positive for 2016.




November 2015










October 2015



  • New research from Grant Thornton’s International Business Report (IBR), a quarterly survey of 2,500+ business leaders in 36 economies, reveals the extent to which contagion caused by China’s economic slowdown is spreading to businesses around the world. Business confidence and expectations for revenue and exports are down, not just in China’s near neighbours, but in several major economies which count on the world’s second biggest economy as a major trading partner.









  • See also World’s Top Finance Officials Find Global Economy Sputtering (WSJ).



  • PwC's own Economics team launched its monthly Global Economy Watch for October. This month, our economists focused on China’s slowing economy as policymakers manage the rapid cooling of its debt-fuelled property market, and analyse how this poses a major challenge for some economies.






September 2015













  • PwC launched its monthly Global Economy Watch for September. This month, our economists focus on sovereign investment funds, and conclude that now is the time for policymakers to review their sovereign investment funds and question whether different objectives could be beneficial for their economy.



August 2015



  • World trade recorded its biggest contraction since the financial crisis in the first half of this year, according to figures that the Financial Times claimed will fuel a debate over whether globalisation has peaked. The volume of global trade fell 0.5% in the three months to June compared with the first quarter, the Netherlands Bureau for Economic Policy Analysis, keepers of the World Trade Monitor, said.



  • The eurozone’s economy grew by 0.3% from April to June by comparison with the previous three months, slightly less than the 0.4% that it registered in the first quarter. The surprisingly feeble showing comes despite the European Central Bank launching a big bond-buying programme in March and a depreciated euro, which should boost exports. Germany’s GDP expanded by just 0.4% in the quarter and France recorded zero growth. Still, Greece grew by 0.8% and Spain by 1%. The currency bloc remains on course for its best annual economic performance since 2011.



  • PwC's Economics team launched its monthly economy watch, for August. With recent events in Greece bringing bailouts back into the headlines, this month's issue focuses on how the five eurozone bailout economies have been performing. Click here to read the full Global Economy Watch.








July 2015





  • Gold prices dropped to a five-year low of around $1,090 per troy ounce, partly in reaction to the US Fed repeating that it is on course to raise interest rates this year. The news that China’s central bank, which wants to boost the yuan as a trading currency, had made much smaller purchases of gold reserves than had been thought was also a factor.



  • According to the Eurozone Chartbook for July 2015 from Oxford Economics, momentum in the eurozone remains positive. Growth in Q1 was strong compared to the average of the past five years, at 0.4% over the quarter. The latest activity data suggest that the eurozone recovery has, if anything, gained further momentum in Q2. Oxford's GDP indicator points to quarterly GDP growth of about 0.5% in the second quarter. However, the pace of recovery is likely to remain very different across member states and even stronger exports and investment will not be in a position to significantly boost growth until next year.





  • PwC's own Economics team launched the monthly Global Economy Watch for July. This month's issue focused on the likely move by the US Fed to hike up its policy rate later this year, and the potential impact of this both within the US and globally.






June 2015



  • PwC's Economics team launched its monthly Global Economy Watch for June. This month's issue focused on North Africa. It’s been almost five years since the beginning of the ‘Arab Spring’ which brought about significant change in North Africa and the wider region. With this milestone approaching, PwC economists have taken a look at the five largest North African economies – Egypt, Algeria, Morocco, Sudan and Tunisia – and highlighted some of the key points that businesses and policymakers should consider when thinking about North Africa  Click here to read the full Global Economy Watch.










May 2015





  • Euro area annual inflation was 0.0% in April 2015, up from -0.1% in March. In April 2014 the rate was 0.7%. EU annual inflation was also 0.0% in April 2015, up from -0.1% in March. A year earlier the rate was 0.8% - details.



  • PwC's Economics team launched the monthly Global Economy Watch for May. This month's issue focuses on the impact on emerging economies of the rising cost of US$ credit. As the US economy has picked up and QE has come to an end, the dollar has appreciated by around 20% on a trade-weighted basis over the past 12 months PwC’s economists have assessed the vulnerability of 14 emerging markets which have issued significant amounts of dollar denominated debt. Most seem reasonably well placed to deal with the risks associated with a stronger dollar.







  • According to the EU's own forecasts, the combined strength of a number of positive factors blowing in the EU’s direction underpin a slight upward revision for GDP growth this year. Real GDP growth in the euro area is now expected to pick up from 0.9 % last year to 1.5% in 2015 and 1.9% in 2016. In the EU, GDP growth is now forecast to rise from 1.4% in 2014 to 1.8% this year and 2.1% in 2016.






April 2015


  • Eurozone loans to the private sector rose for the first time in three years. Excluding loans to banks, lending rose 0.1% in March compared to a year earlier – the first annual increase since March 2012. Proponents of the ECB's QE program credit the addition of billions of euros into the banking system for the increased willingness of Europe's banks to lend.



  • The Economist identified the 15 fastest growing economies in 2015. five are in Africa.










March 2015






February 2015







January 2015




  • The FT forecast that the world economy is extremely likely to grow in 2015. It has, after all, grown every year since the second world war, with the sole exception of 2009, the year of the global financial crisis, when it shrank 2% at market exchange rates and remained roughly constant at purchasing power parity. The International Monetary Fund believes the world economy will grow at nearly 4%, at PPP.



December 2014






November 2014



  • The FT asked: where has all the trade gone? Looking at the figures, a casual observer might conclude that globalisation is in crisis. Total trade in goods and services, having initially bounced back from the global financial crisis, has slowed sharply. Usually growing twice as fast as the world economy, it is underperforming gross domestic product for the first time in four decades. In reality, the situation is less dire.


  • Global business confidence fell to a five-year low, claimed CNBC. According to a survey of 6,100 companies by Markit, the number of companies expecting their business activity to be higher in a years' time exceeded those expecting a decline by just 28%. This was below the net balance of 39% recorded in June, and the lowest since the survey began in 2009.




October 2014



  • The Economist warned that the world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan’s economy is struggling and China’s growth is now slower than at any time since 2009. Unpredictable dangers abound, particularly from the Ebola epidemic, which has killed thousands in West Africa and jangled nerves far beyond. The risk of a new and painful downturn, though still small, is growing. That growing risk is due to the surprising and disconcerting re-emergence of monetary phenomena that haven't really been seen since the gold standard of the 1930s






September 2014







August 2014

  • Deloitte's Global Economic Outlook, Q3 2014 suggested that the global economy appears to be settling into a new normal of modest growth in developed economies, stabilization of growth in emerging economies, and a decline in systemic risks emanating from policy mistakes. On the other hand, geopolitical risks appear to have reared their heads lately to a degree we haven’t seen in some time.



July 2014