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Significant Changes in the Quarterly Consensus - September 12, 2016

Changes in G-7 Quarterly Forecasts for GDP contrasts the September 2016 consensus projections in blue (pages 3, 28 and 29) with those from March 2016 and September 2015. A below-par first half of 2016 in the US has caused expectations to drift below those of March. GDP growth may now only breach the 2% mark beginning Q1 2017. The UK consensus has changed dramatically following the Brexit referendum, indicating a marked slowdown to Q2 2017. Projections for Japan have balanced out after the April 2017 tax hike was postponed. A sustained period of low growth looks set to continue, though. Italy has been hit by stalling investment activity and soft consumer spending. While most European countries have shown few immediate ill-effects of Brexit so far, concerns have re-ignited over Italy’s troubled banking sector and the constitutional referendum.

 
Historical Data
Quarterly Forecasts from Sep. 2016 Survey
Gross Domestic Product*
*% change over previous year
Q3 15
Q4 15
Q1 16
Q2 16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
United States
2.2
1.9
1.6
1.2
1.4
1.8
2.2
2.5
2.3
2.2
Japan
1.8
0.8
0.1
0.8
0.4
1.0
0.8
0.9
1.0
1.0
United Kingdom
2.0
1.8
2.0
2.2
1.6
1.1
0.8
0.4
0.6
0.8
Euro zone
2.0
2.0
1.7
1.6
1.5
1.4
1.2
1.2
1.3
1.4

For many G-7 and Western European economies, Q1 and Q2 GDP were a study in contrasts. German Q1 GDP accelerated by 0.7% (q-o-q) which helped to lift the y-o-y rate to 1.8%. Because Q1 had been so upbeat, the forecast for Q2 was initially for payback. Fortunately, growth did not falter as sharply as expected, supported by exports and private consumption gains which left y-o-y GDP at a still-decent 1.7%. This pace of activity is projected to remain in place over the rest of 2016 before slowing somewhat in 2017. The Q2 story for France was disappointing. After a positive Q1 start, Q2 activity stalled. Q1 GDP growth was supported by tourism-related spending linked to this summer’s Euro football championships, but this effect faded going into Q2. Moreover, consumer and business sentiment have been eroded by the lacklustre economic environment and terrorism attacks. In Italy, confidence is even more downbeat on the back of stalled momentum in industry and domestic demand. The slowdown in global demand has certainly not helped the externally-reliant sectors of many economies ... (commentary continued in Sep. 2016 publication).

 
Historical Data
Quarterly Forecasts from Sep. 2016 Survey
Consumer Price Inflation*
*% change over previous year
Q3 15
Q4 15
Q1 16
Q2 16
Q3'16
Q4'16
Q1'17
Q2'17
Q3'17
Q4'17
United States
0.1
0.4
1.1
1.1
1.1
1.5
2.2
2.1
2.3
2.3
Japan
0.1
0.2
0.0
-0.3
-0.3
-0.1
0.2
0.4
0.7
0.8
United Kingdom
0.0
0.1
0.3
0.3
0.8
1.4
2.1
2.6
2.6
2.5
Euro zone
0.1
0.2
0.0
-0.1
0.3
0.7
1.3
1.3
1.3
1.3

 

 

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Taken from Consensus Forecasts, September 2016.