Modest pace of global expansion should continue - Wells Fargo

According to analysts from Wells Fargo, Q1 growth figures suggest that the global economy is expanding at a modest pace. They forecast that the expansion will continue. 

Key Quotes: 

“Some foreign economies have released their respective Q1 GDP growth figures in recent weeks, and the results generally suggest that the global economy is expanding at a modest pace at present. The Chinese economy grew 6.9 percent (year over year) in Q1, and real GDP in the Eurozone grew nearly 2 percent (annualized) on a sequential basis. The British economy continues to expand three quarters after the Brexit vote last June clouded its long-term economic outlook.”

“Rates of consumer price inflation have edged higher this year as energy prices have stabilized. That said, real GDP growth rates generally are not robust enough yet to lead to a significant increase in inflation. So, we forecast that most major foreign central banks will keep their policy rates unchanged through 2017. The ECB may further dial back its monthly QE purchases later this year and likely will cease buying bonds altogether in 2018. But, in our view, an ECB rate hike does not look likely until late 2018, at the earliest.”

“There are still plenty of geopolitical risks in the world; but, assuming that the geopolitical environment generally remains “behaved,” we forecast that the modest pace of global expansion that has been underway over the past few years will generally continue.”