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OECD Cuts Global Growth Projections

OECD Joins Growing List of Global Institutions Cutting Global Growth Projections

global-growth

Deteriorating data from across the globe combined with more dovish commentary from global central banks fueled the upside in risk assets but was unable to conceal the growing unease with the pace of global economic outlook.  Worldwide GDP projections were rolled back further amid ongoing concerns about the pace of expansion, especially with the weakness emanating from emerging markets.

Weekly Review

Last week got off to a rocky start from a fundamental data viewpoint following disappointing GDP figures from Japan and worsening trade numbers from China.  In spite of the dramatic easing measures undertaken by the BoJ including negative interest rates, Japanese annualized GDP contracted by -1.40%, falling further than estimate with the quarterly figure shrinking -0.40%.  Meanwhile, Asian trade continues to collapse as evidenced by the -11.2% drop in Chinese exports combined with a -18.8 slide in imports.  After adding over $500 billion in debt during January to alleviate the growing deflationary trend, China is on pace to add a similar sum in February as concerns about the outlook grow.

Aside from the softness in Asia, warnings on growth from both the European Central Bank and the Organization for Economic Cooperation and Development added to cautious overtones in financial markets despite a rally in risk assets for most of the week.  The ECB hinted at further stimulus in upcoming monetary policy decisions while the OECD revised projections lower amid worsening conditions in emerging markets and below trend growth in advanced economies.

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The Week Ahead

Figures on fourth quarter domestic product are set to top the list of economic events over the coming week, starting out with German GDP set to be released on Tuesday.  The figures are expected to meet estimates and match the earlier reading of 0.3% growth on a quarterly basis and 2.1% on an annualized basis.  Thursday will see the release of the comparable figures from the United Kingdom, with the GDP forecasted to climb 1.9% year over year and 0.50% on a quarterly basis.  Finally, Friday will see the first revision of the fourth quarter GDP figure, with forecasts currently projecting decelerating growth with 0.5% expansion anticipated versus 0.7% recorded in the first reading. 

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