The Global Macro Outlook:The view from the commodity pits

We expect global industrial production momentum to fade over the nextfew months, before rolling over during the summer. In the case of steel,chart below, output growth slowed from 8.1% YoY globally in January to 7.8% inFebruary at 1.65bn tonnes annualised, Colin Hamilton and the Macquariecommodities team are forecasting 1.6% YoY growth for 2017, and -0.3% for2018. The key to this is Chinese construction activity, where we expect somesigns of weakening (but not collapse) to emerge during the coming months, andan adjustment in Chinese inventories (Fig.1 and Fig.15).

Please see pages 2-5 and 11-14 for more from the commodity team.

For China, we expect 1Q17 to be the peak of PPI inflation, earning growth andnominal GDP growth—please see pages 16-17.