This year’s stock market rout is not a sign of impending doom for the world economy, an economics consultancy has said today.
Global GDP should grow by 2.6 per cent this year, the same rate as in 2015, according to the Centre for Economics and Business Research (CEBR).
China is slowing, not collapsing, the CEBR said, adding that stock market concerns appeared to be overblown. The slowdown in US economic growth over recent months is also expected to be a blip, with growth expected to rebound this year. Cheaper oil will also be a huge boost to the world economy rather than a hindrance.
“There is a clear disconnect between the dismal performance of financial markets and the state of the real economy at the minute. Our new forecasts see world GDP expanding by 2.6 per cent this year – steady from 2015 and certainly far from a recession,” said CEBR economist Danae Kyriakopoulou.
“But while we don’t think the markets are currently justified in being so gloomy, there is a risk that market performance feeds into the real economy thus making their expectations self-fulfilling.”