Weekly Economic Commentary | Week of February 16, 2015

posted 2/20/2015 in Investments

KEY TAKEAWAYS

• The market continues to expect that global GDP growth will accelerate in 2015 and 2016, aided by lower oil prices and stimulus from two of the three leading central banks in the world.

• The consensus has been raising its estimate for 2015 growth for developed economies and sharply lowering its estimate for emerging markets.

• The drop in oil and other commodity prices over the past year or so has played a key part in the progression of global GDP forecasts.

GLOBAL GDP TRACKER

The top 25 global economies make up 90% of global gross domestic product (GDP). Through Friday, February 13, 2015, 13 of these economies (including countries and political unions) have already reported Q4 2014 GDP results, including the four largest economies (U.S., Eurozone, China, and India). As this commentary was being prepared for publication, Japan, the world's fifth-largest economy, released Q4 GDP results. Between now and the end of February 2015, Thailand, Mexico, and South Africa will report Q4 2014 GDP; and in the first half of March 2015, reports are due out from Canada, Australia, Switzerland, and Sweden. In late March and early April 2015, key emerging market economies, Brazil and Russia, will report Q4 2014 GDP results.

Our infographic and the following table, arranged in order of Q4 2014 GDP report date, indicate:

• Whether a country is a developed or emerging market economy

• The size and relative size of the economy compared to global GDP

• The result (if available) and consensus estimate (as compiled by Bloomberg News)

Unless otherwise indicated, the actual GDP readings and forecasts in the graphic are year-over-year readings.

In the table following the infographic, we've also included a comment on the economy as it relates to oil, indicating, where pertinent, whether the country is a net importer or exporter of oil, how the oil price decline is likely to impact the economy in 2015, and for the larger economies (the top 10 or so), a general comment on how the GDP outlook is shaping up for 2015. We derive these comments from the January 26, 2015, Weekly Economic Commentary, "Gauging Global Growth: An Update for 2015 and 2016." As we noted in that commentary, the market continues to expect that global GDP growth will accelerate in both 2015 and 2016, aided by lower oil prices and stimulus from two of the three leading central banks in the world; but, in a twist on recent history, the consensus has been raising its estimate for growth in 2015 for developed economies and sharply lowering its estimate for emerging markets. We also noted that even though other factors are in play (inflation, war, sanctions, weather, fiscal and monetary policy, longer-term secular trends like demographics, etc.), the drop in oil and other commodity prices over the past year or so has played a key part in the progression of GDP forecasts across the globe.

Click here for the infographic, Global GDP at a Glance.

Click here for the accompanying table.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

The economic forecasts set forth in the presentation may not develop as predicted.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal, and potential illiquidity of the investment in a falling market.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, geopolitical events, and regulatory developments.

Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments, and exports less imports that occur within a defined territory.

This research material has been prepared by LPL Financial.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity.

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