Macroeconomic roundup: Emerging economies weighing on global growth
Jason Walls breaks down the week's biggest news in macroeconomics on NBR Radio, and on demand on MyNBR Radio.
A recent Wall Street Journal story has highlighted just how much stress some of the world’s emerging economies are under.
The WSJ reported central banks from around the world have been selling US government bonds at a staggering rate.
Noteworthy countries are China, Russia, Brazil and Taiwan – all classified as emerging economies.
The selloff of US bonds looks to be a reaction to the slowing global economy and the looming US Federal Reserve interest rate hike.
Earlier this week, the International Monetary Fund (IMF) reported global growth outlook has been downgraded from 3.3% to 3.1%.
This compares with 3.4% last year.
The fund is warning of a recession – which the IMF defines as 3% or less growth in the world economy.
IMF managing director Christine Lagarde cited emerging economies as a major factor behind the downturn in growth estimates.
Emerging economies have taken a hit recently – due to factors such as low global commodity prices – and are looking for capita, which is one of the major forces behind the selling of the US bonds.
Also this week, the Reserve Bank of Australia (RBA) surprised no one and kept its interest rates on hold.
Despite many analysts suggesting the RBA’s current interest rate of 2% is as low as it will go, some economists are emerging from the woodwork and forecasting rates to be slashed to 1.5% by May next year.
ANZ senior FX strategist Sam Tuck says rates will be cut, whereas HSBC chief economists Paul Bloxham is adamant rates will remain at 2% for the foreseeable future.
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NBR Radio
Fri, 09 Oct 2015
Fri, 09 Oct 2015
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Macroeconomic roundup: Emerging economies weighing on global growth
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