Predictions & Estimates from Economist Daniel Lacalle
Read a guest post from Economist Daniel Lacalle, in which he provides some insight on five very important issues that are likely to impact the global economic outlook for the foreseeable future.
Daniel Lacalle is a fund manager who holds a PhD in Economics and has a CIIA financial analyst title. He is author of “Life In The Financial Markets” and “The Energy World Is Flat” (Wiley) as well as “Escape from the Central Bank Trap” (BEP). He has been ranked as one of the Top 20 Economists in the World by Richtopia and has over 24 years of experience in the energy and finance sectors. As an expert in this field, let's take a look at what he is foreseeing for the global economy.
1. France to emerge as Europe's biggest problem?
The previous year was marked by a lot of anti-establishment populist movements, immortalized in the victory of U.S. President Donald Trump and the United Kingdom's vote to exit the European Union. However, Lacalle believes that these don't come close to the biggest potential threat to stability in Europe, which is the likely political upheaval in France.
The French elections will be held later on this year and one of the biggest frontrunners is Marine Le Pen who has spoken about starting their own referendum to leave the bloc. Although Le Pen promises that this can be achieved in an orderly fashion, the numbers suggest that this might do more harm than good in the long run. After all, France is running on an unsustainable economic model with a high tax burden and labor market rigidity, keeping it in stagnation.
2. Potential reversal in Spain's recovery
There's no denying that the Spanish economy has made great strides in restoring economic growth and employment over the past few years, but this recovery could be threatened by both internal and external forces. For one, Spain has a complicated political landscape that makes reforms challenging to implement. To make things worse, the IMF is requiring Spain to raise some VAT tranches, which could dampen consumer spending just as it is trying to get back on its feet.
3. Are currency wars over?
Monetary policy seems to have taken the backseat to politics lately, although world leaders like Donald Trump haven't stopped short of calling out countries like Japan and China for unfairly keeping their currencies weak. However, much of the global economy and central bank policy has evolved these days as rates have been cut to record lows and massive amounts of liquidity have been doled out in response to the financial crisis nearly a decade ago.
This suggests that monetary policy authorities have pretty much used up all the tools in their arsenal to keep internal and external demand afloat, including methods to devalue their currencies. Republicans have pointed out that central banks should no longer use the balance sheet indiscriminately as this would perpetuate bubbles.
4. Earnings recession may be over in Europe
On a less downbeat note for Europe, it may be the end of the earnings recession in the region after more than half a decade of dismal results. Morgan Stanley reported that out of 75 companies surveyed, 43% have surpassed estimates by 5% or more while less than 30% disappointed. This trend could carry on and improve, buoyed by rising commodity prices, improved banking performance, upward revisions of global growth, and widespread margin improvement.
5. What's next for oil?
Oil has been recently hogging the spotlight as traders are trying to gauge whether or not the OPEC output cut is having a material impact on prices. Although several institutions projected that this could result to a significant reduction in supply, there are other factors such as higher US production that could still yield an overall increase in stockpiles. Apart from that, the complacent environment in which energy price gains are triggered by the inflationary effects of stimulus while overcapacity and debt remain could be a recipe for a crisis.
5-year economic forecasts on 30+ economic indicators for 127 countries & 33 commodities.
Date: March 22, 2017
TagsTunisia Colombia Brazil India Russia France Vietnam China Fed Agricultural Commodities oil prices Forex Infographic Nordic Economies Portugal Precious Metals Commodities Unemployment rate Company News Turkey Energy Commodities Brexit Germany Spain Trade World Bank IMF Ukraine Japan Commodities Italy United States Exchange Rate MENA Asia Panelists Sub-Saharan Africa South Africa Greece Consensus Forecast Economic Growth (GDP) Latin America USA Banking Sector Africa Financial Sector Housing Market European Union UK Australia G7 Base Metals Commodities OPEC Canada Venezuela precious metals Oil Major Economies Emerging Markets Argentina Inflation Iran Gold Eastern Europe Euro Area Investment Mexico Industrial Metals Commodities
25 minutes ago
55 minutes ago
Eurozone: Composite PMI eases in June, but points to best quarter in over six years in Q2. Read more:… https://t.co/ZIMqfbFsCC
55 minutes ago
Greece: Economy grew after all in Q1, revised data shows. Read more: https://t.co/nBqGtlgt2K
1 hour ago
1 hour ago
- How will the Fed reduce its balance sheet & and how will the ECB end QE? - 18 economic experts weigh in
- Thoughts on "unwinding" QE from Frances Coppola
- Gold: The Most Precious of Metals (Part 3)
- The Fed and ECB at a crossroads: Unwinding QE
- Spain: The economy that continues to silence the critics
- Latin America: The Most Unequal Region in the World
- The History of OPEC: Has it been a Success?
- FocusEconomics Announces 2017 Analyst Forecast Awards Winners
- Latin America’s rising unemployment bucks nearly decade long trend
- Escape from the Central Bank Trap by Daniel Lacalle
- China's economic rebalancing act: What to look out for in 2017
- Driving Growth in Latin America: Challenges & Priorities
- Is the Global Economy Rebalancing?
- Commodity exporters face challenging times
- Recent Global Events Facilitate Mercosur-Pacific Alliance
- 23 economic experts weigh in: Why is productivity growth so low?
- Mexico's outlook as Trump nears 100-day mark
- Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
- The anxiety of the small saver in a world of negative interest rates
- Brexit negotiations. Between Uncertainty and Urgency
- An Economic History of the EU from El Blog Salmón
- Baby Boomin': Implications of high population growth in Latin America
- Survey of International Economists Predicts a Le Pen Defeat in French Elections, Says Macron has Best Economic Plan
- Spain in a global context: developed economy with some challenges
- How much is crime costing Latin America?
- Predictions & Estimates from Economist Daniel Lacalle
- What economy will the new Dutch government inherit?
- “The data is not a true reflection of reality in India” Interview with Société Générale India Economist
- 2017 & 2018 Economic Outlook for the Top Oil Producing Countries
- Which countries will have the highest and lowest inflation in 2017?
- What are the prospects for Emerging Economies in 2017?
- What to expect in Asia for 2017
- Top Economics & Finance Blogs of 2017
- Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
- 4 Key European Elections That Will Impact the Economy in 2017
- How are security concerns and political chaos affecting Turkey’s economy?
- Global growth to edge up in 2017
- Set to breach targets again? Debt and deficit outlooks for Southern European Eurozone countries in 2016 & 2017
- What does Donald Trump mean for the U.S. economy?
- How will emerging markets perform in 2017?
- The economic impact of a break in U.S.-Philippines ties
- Trump election: Base metals surge due to infrastructure plan
- 5 updates on the Venezuelan economic crisis
- Canada: When your neighbor’s house is on fire…
- Short-term pain before long-term gain? A look at French labor reform and economic growth
- Asia: Unremarkable growth & unfulfilled promises?
- How India's latest monsoon is affecting the economy
- Russian economy update in wake of OPEC deal announcement
- Innovation in Latin America: Potential Goes Untapped Due to Weak Economic Conditions
- The Wisdom of the Crowds and the Consensus Forecast
- Can the peso predict the U.S. election results?
- There's no end in sight to the Venezuela crisis
- A Look at the European Union Political Calendar
- Survey of international economists shows uncertainty surrounding elections damaging U.S. growth prospects
- FocusEconomics partners with leading online statistics provider Statista
- China: Recent postive economic data may be papering over the cracks
- Sub-Saharan Africa's 2016 & 2017 growth rates
- The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
- How much money do migrants from Latin America send home?
- The U.S.' (Not So) Mysterious Case of the Missing Men
- What to expect from the G20 economies by 2020
- The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit