The Edmond de Rothschild Group has released the first edition of its new publication "Macroeconomic Forecasts", revealing that the Group's Economic Research Department expects global growth to steady at a disappointing pace.

Group Chief Economist, Mathilde Lemoine, stated that central banks still hold ammunition but that it would be difficult to ascertain the impact of negative interest rates as the policy is unprecedented.

"As long as governments fail to implement economic policies designed to enhance productivity, central banks have no choice but to keep taking the process of financing growth with debt a step further," commented Lemoine, who specialises in international, monetary, employment and growth issues.

The report anticipated that fixed-asset investment and foreign trade in the US will continue to bring down overall GDP growth, although pointed to the momentum of private consumption and increased public spending as the antidote to balance things out.

By contrast, Japan is expected to see persistent drag on expansion from weak personal expenditure, which is likely to see the Bank of Japan ease its monetary policy further.

The Euro Zone has finally put paid to its "Great Recession", thanks to public spending and an upturn in the real-estate market. These are expected to remain important factors in propelling growth, although the upturn in commodity prices contrasted with a slightly slower momentum in job creation could negatively affect consumer spending.

Switzerland is in a more fortunate position, with strong private consumption pushing GDP growth onto the right track. Deflation, though set to continue on into 2017, is not a source of concern as it does not stem from weak demand.

Declining productivity and overcapacity is expected to continue to weigh heavily on emerging countries, although this could be alleviated by growth rates picking up again by the end of 2016. Structural reforms are reportedly needed in order to get these regions' economies back on track.

 

Image by Edmond de Rothschild Group