Wall Street Economists See Global Growth Cresting Not Collapsing

  • Most sticking with forcasts for growth around 4% this year
  • IMF set to update its global economic outlook on Tuesday

The International Monetary Fund conducts its semi-annual health check of the world economy this week with investors fretting global growth is starting to sag after accelerating the most since 2011 last year.

Despite the soft start to the year and ongoing trade tensions, economists on Wall Street and beyond are sticking to forecasts for another solid economic expansion in 2018 while acknowledging the risks of slippage have mounted.

Here’s a rundown of what economists at major banks are saying in reports and interviews about the outlook. The forecasts are for global output in 2018 and are mostly in terms of purchasing power parity, the metric favored by the IMF which currently anticipates an expansion of 3.9 percent.

JPMorgan Chase & Co. (3.9 percent)

While surprised by recent news we remain comfortable that 2018 will produce strong and synchronized global growth. However, for the first time in a year, activity and survey readings are challenging our forecast.
–Bruce Kasman, chief economist, April 13

BNP Paribas SA (3.9 percent)

We see warning signs that things may be slowing. Risks are largely to the downside. Various indicators are delivering readings last seen before the Great Recession. Upside potential from here is relatively limited, meaning the risks are largely to the downside.
–Paul Mortimer-Lee, chief market economist, March 23

PIMCO (3-3.5 percent at current exchange rates)

It’s been clear that growth has peaked and is no longer accelerating. The question is how sustainable the expansion now is. In the US, we still see fiscal stimulus coming in and I would expect there to be a re-acceleration. We are beginning to see the end of this economic expansion, but it’s the beginning of the end not the end.
–Joachim Fels, global economic adviser, April 11

Nomura Holdings Inc. (4.1 percent)

Amid heightened concerns about the outlook for the world economy in recent weeks, we argue that downside risks to global growth are overstated. Leading indicators, including surprise indices, have softened but in many cases from multi-year highs and unsustainable levels.

Global income and profit momentum is still strong, global financial conditions are still loose, the thrust of global fiscal policy is positive and underappreciated, and capex dynamics are offering support.
–Andrew Cates and Andy Chaytor, research analysts, April 11

Barclays Plc (4.2 percent)

Escalation of the U.S.-China dispute has entered a new phase, but ongoing trade war uncertainty leads us to recommend shifting away from risk assets. Recent declines in global manufacturing confidence and a moderation in U.S. job gains raise risks to our growth view. But sentiment is still at historically healthy levels, U.S. earnings are strong, and China growth has accelerated, keeping the global expansion intact in the second quarter.
–April 6 report

Bank of America Merrill Lynch (4.0 percent)

It’s still a synchronized improvement, though we may have hit the maximum pace. The U.S. will move into the lead because of the big fiscal stimulus. Growth will be a little softer in Europe and Japan.
–Ethan Harris, head of global economics research, April 9

Deutsche Bank AG (3.9 percent)

Growth is slowing from a relatively high level. We’re worrying much more about overheating than a slowdown. The big tailwind for global growth will continue to be the fiscal expansion in the U.S.
–Torsten Slok, chief international economist, April 9

Read more: http://www.bloomberg.com/news/articles/2018-04-15/wall-street-economists-see-global-growth-cresting-not-collapsing