Easing tailwinds for the global economy – Danske Bank

The analysis team at Danske Bank has revised their forecast for global growth lower due to downward revisions in the US and China.

Key Quotes

“We no longer look for a fiscal boost in the US in 2018 and policy tightening in China has exceeded our expectations. Our forecast for the euro area is broadly unchanged.”

“Our baseline scenario for the global economy is now more of the same, with the US growing around 2% and the euro area growing by just below 2%. Improving sentiment and less political uncertainty in Europe are replaced by a bigger drag from China, where we look for the economy to slow down in 2017 and into 2018.”

“We believe inflation has peaked and expect it to decline over the next year due to a turn lower in commodity prices. We look for the ECB to keep an accommodative stance and continue asset purchases in 2018, albeit at a reduced pace of EUR40bn per month. The Fed is on track for three hikes in both 2017 and 2018, while dipping its toes in reducing its balance sheet.”