Macq-ro insights:Global slump scenarios and the EM economies that concern us the most

When economies are running hard in one direction, we believe it is wise toresearch the other. With the global recovery maturing, we examine 3 scenariosthat would lead to global growth beneath 2.5% pa, our definition of a slump.

Our 2016, 2017 and 2018 global real GDP growth forecasts are 2.6%, 3.0% &2.9%, respectively. Our long-standing ‘long grinding cycle thesis’ is for globalgrowth to remain in a 2.5-3.0% pa range.

With the economies of the US, the Eurozone and China each being around 20%of global GDP (using market exchange rate weights), then our three scenarioshave each in turn growing 2% less than currently forecast. Each scenario takes0.4% off global growth directly, with spill over consequences doing the rest: