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Edition July 3, 2017 - Crédit Agricole S.A.
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  • Edition July 3, 2017

    World – Macroeconomic Scenario for 2017-2018: Pleasant surprises of a slow-burn cycle

    The slow-burn cycle is currently delivering some pleasant surprises. There are no signs on the horizon of the excesses typical of a premature and often sudden end to a cycle. In particular, we are desperately seeking inflation. As a result, a ‘harmonious' economic scenario where monetary support mechanisms will only gradually be withdrawn is developing – this is a reasonably optimistic scenario where financial conditions are not brutally tightening. It would be easy to draw up a dark economic scenario, where every latent risk raises its head, and predict the end of the world as we know it. But we will refrain from that and posit a reasonably optimistic scenario.

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  • The boring but reassuring durability of the cycle

    Growth is flourishing without degenerating into inflation. It seems able to withstand a gradual withdrawal of monetary support mechanisms. This homeopathic, cautious, gradualism raises hopes that financial conditions will not deteriorate suddenly....

  • Content:

    Developed countries – Desperately seeking inflation
    Emerging countries: Brave new world?
    The resurgence of US shale oil & gas
    Monetary policy – Tightening must be ingenious and delicate
    Focus – The end of QE
    Focus – Can a correction in US equities derail the current global momentum?
    Interest rates – Modest, “orderly” rise
    Exchange rates – Euro bounces back, dollar struggles
    Economic and financial forecasts

  • Extract:

    How do you best describe a cycle that ends up delivering pleasant surprises? Answer: by qualifying it, so to speak, as a slow-burn cycle. The classic sequence of events is falling into place, albeit very slowly. It is as if it were necessary – in addition to the obvious need to absorb excess capacity – to remove all doubts before taking any decisions. Household consumption is still the main driver of growth. But investment is finally beginning to show signs of life. The labour market has finally started to improve. And growth has finally started to become more job-rich. Meanwhile wages and prices are proving to be surprisingly well-behaved. This is a sign both of excess capacity, which is proving to be hard to absorb, and, without a doubt, structural change, what with the growth of the service economy and of ‘uberisation' as drivers of competition, which are helping to keep wages down, especially in economies that are still convalescing after the crisis.

  • Associative topics : Africa and Middle East | Asia and Oceania | CEE and Central Asia | Europe | Latin America | North America

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