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60 seconds on why cracks remain in the global growth outlook

It has been a gloomy start to 2016 for the global economy, and while the outlook over the next two quarters is set to improve, longer-term conditions are likely to remain tough.

05/25/2016

Keith Wade

Keith Wade

Chief Economist & Strategist

With lacklustre economic growth and downgrades to forecasts, it has been a disappointing start to 2016 for the world economy.

Looking ahead to the next two quarters, there are some signs that growth is picking up and that problems that were holding back some companies earlier in the year are beginning to fade. The consumer side is picking up too, as credit has begun to grow again.

However, global growth is still unlikely to be that strong in 2016.

Why has global growth been so weak?

A lot of the weakness we’ve seen is to do with the aftermath of the global financial crisis. It is taking a long time for households, companies, countries and regions to adjust to the new environment.

Demographics have got a part to play as well. There has been a slowdown in the growth of the working population and productivity growth has slowed down too.

Shorter-term, the global economic outlook is brighter than it was earlier in the year, but longer-term it is still going to be quite tough.

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.