We are now tracking Q4 global growth at only 2.7% QoQ annualized. That’s the 6th lowest percentile post-crisis, and about 150bp below the read for H1-18. EM and DM are roughly equally bad: EM growth is tracking at 3.95% (vs a post-crisisaverage of 5.4% and an H1-18 average of 5.7%) and DM at 0.9% (vs a post-crisis average of 1.8% and H1-18 average of 2.2%). Compared to our early December update, that’s an additional 40bp loss of growth momentum over the last 4 weeks for both EM and DM.
Herein lies the problem I’ve been discussing. Right now markets are running on the narrative of some wind back in US tightening which is lifting the EUR, CNY and EM currencies. This is being given further impetus by the building hope of trade deal between the US and China.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
