June 2017

In this month's update, we look at how political risks may be fading and macro worries are returning, consider the policy differences between the UK's two major parties, and examine the diverging fortunes of the emerging markets.

05-31-2017
Wordle-June-17
Read full reportEconomic & Strategy Viewpoint - June 2017
30 pages452 KB

Authors

Keith Wade
Chief Economist & Strategist
Azad Zangana
Senior European Economist and Strategist
Craig Botham
Senior Emerging Markets Economist

Forecast update: political risks fade, macro concerns return (page 3)

  • The global recovery remains intact and inflation appears to have peaked as the energy shock fades. Eurozone growth continues to strengthen but elsewhere leading indicators point to more modest expansion in the US, China and Japan.
  • Political risks have faded with the election of President Macron in France and following developments in the US, which have seen President Trump soften his stance on protectionism and struggle to gain traction in Congress. More traditional macro concerns return to the fore, skewing risks toward deflation.

European forecast update: from strength to strength (page 8)

  • The eurozone continues to outperform expectations, with private business surveys pointing to upside risks. Iberia led the pack in the first quarter, but Germany also enjoyed strong growth. Meanwhile, inflation has risen, but is set to fall back in coming months, easing pressure on the European Central Bank to tighten monetary policy.
  • The UK has suffered the slowdown in growth that most economists were expecting. Higher inflation due to the fall in sterling is squeezing household budgets, causing spending growth to slow. This should persist for most of this year, but as inflation falls back, growth should recover.

UK election: from coronation to contest (page 15)

  • The election has unexpectedly become more interesting with Theresa May’s lead in the opinion polls more than halving in recent weeks. We consider the key policy differences between the two leading parties.

Emerging markets forecast update: diverging fortunes (page 18)

  • Downgrades to most of the BRIC economies as idiosyncratic stories deteriorate, though Brazil and Russia are the worst affected. China escapes unscathed, with a slowdown still expected later this year after a strong first quarter, as tighter policy bites.

Views at a glance (page 26)

  • A short summary of our main macro views and where we see the risks to the world economy.

The full Viewpoint can be found as a PDF below.

Read full reportEconomic & Strategy Viewpoint - June 2017
30 pages452 KB

Subscribe to our Insights

Visit our preference center, where you can choose which Schroders Insights you would like to receive

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.

Authors

Keith Wade
Chief Economist & Strategist
Azad Zangana
Senior European Economist and Strategist
Craig Botham
Senior Emerging Markets Economist

Topics

Azad Zangana
Craig Botham
Keith Wade
Inflation
Global economy
Growth
Economics
Follow us

Please consider a fund's investment objectives, risks, charges and expenses carefully before investing.

The website and the content included is intended for US-based financial intermediaries (and their non-US affiliates) on behalf of those of their clients who are both (a) not “US persons” as that term is defined in Rule 902 under the United States Securities Act of 1933, as amended (the “1933 Act”) and (b) “non-United States persons” as that terms is defined in Rule 4.7(a)(vi) under the Commodity Exchange Act of 1936, as amended. None of the funds described herein is registered as an “investment company” as that term is defined in the United States Investment Company Act of 1940, as amended, and shares of the funds described herein have not been and will not be registered under the 1933 Act or the securities laws of any of the states of the United States. The shares may not be offered, sold or delivered directly or indirectly in the United States or for the account or benefit of any “US person.”

The information contained in this website does not constitute an offer to purchase or sell, advertise, recommend, distribute or solicit a subscription for interests in investment products in any Latin American jurisdiction where such would be unauthorized. The information contained in this website is not intended for distribution to the public in general and must not be reproduced or distributed, entirely or partially to any individuals who are not allowed to receive it according to applicable legislation. The investment products and their distribution may not be registered in Latin America, and therefore may not meet certain requirements and procedures usually observed in public offerings of securities registered in the region, with which investors in the Latin America capital markets may be familiar. For this reason, the access of the investors to certain information regarding the investment products may be restricted. Financial intermediaries and Advisors must ensure the information provided in this website is appropriate and suitable to the receiver’s domicile and jurisdiction and according to the applicable legislation.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security/sector/country.

Issued by Schroder Investment Management (Europe) S.A., 5 (“SIM Europe”), rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registered No. B 37.799

Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser, CRD Number 105820, providing asset management products and services to clients in the US and registered as a Portfolio Manager with the securities regulatory authorities in Canada.  Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and as an Exempt Market Dealer with the securities regulatory authorities in Canada.  SFA markets certain investment vehicles for which other Schroders entities are investment advisers.

Schroders Capital is the private markets investment division of Schroders plc.  Schroders Capital Management (US) Inc. (“Schroders Capital US”) is registered as an investment adviser with the US Securities and Exchange Commission (SEC).  It provides asset management products and services to clients in the United States and Canada.  For more information, visit www.schroderscapital.com

SIM (Europe), SIMNA, SFA and Schroders Capital are wholly owned subsidiaries of Schroders plc.