60 seconds with Keith Wade on Why cracks remain in the global growth outlook
The world economy has not made a great start to 2016, we have seen forecasts being downgraded and growth expectations being disappointed. We do think though that going forward as we go into the second quarter and into the summer that there are some signs that growth is picking up and that the problems that were holding back some companies earlier in the year are beginning to fade a little bit and what we call the inventory cycle is now beginning to turn. The other thing that is beginning to improve a little bit is on the consumer side – we are seeing credit begin to grow again. So growth is probably going to be a little bit better going forward but we have to say that for the world economy as a whole, we do think that global growth is not going to be that strong and this has been the fifth consecutive year that global growth has disappointed those initial expectations so we have to ask ourselves why that is, why we've seen that consistent disappointment, and I think a lot of it is to do with the aftermath of the global financial crisis. I think it is taking a long time for households and companies to adjust to the new environment; it is taking a long time for the emerging markets to adjust to this new environment so there are continued pressures that we see. I think that demographics have got a part to play as well, there has been a slowdown in the growth of working population and finally productivity growth has slowed down as well. So yes things are looking a little bit better than they did earlier in the year which is good news but the longer term outlook I think is still going to be quite tough.
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