(MENAFN- Gulf Times) Growth in the GCC is expected to "remain strong" despite lower commodity prices, QNB said as it maintains its "overall positive outlook" for the region, with a growth forecast of 4-4.5% for 2015-16.
On the United States, QNB Economics said the US economy looked very much on track. The second quarter GDP is expected to be revised up to 3.2% and activity data were indicating above-trend growth in Q3, QNB said in in its "economic outlook".
Many market participants were bracing themselves for a Fed rate hike in September, but the ongoing volatility in markets and tighter US financial conditions have led some to push out their call for the date of the first rate hike. Regardless of its exact start date, QNB expects the tightening cycle to be slow and gradual, leading US growth to average 2-2.5% in 2015-16.
The Q2 GDP in the Euro area was slightly weaker than expected (0.3% quarter-on-quarter), but composite Purchasing Managers' Index (PMI) was still showing expansions in July and August.
The region still faces headwinds from weak potential growth and high unemployment. The turmoil in financial markets has led to the appreciation of the euro, which could hurt exports. But the region still benefits from a fading fiscal drag, improving credit channels and now even lower oil prices. QNB therefore expects the Euro area to grow by 1-1.5% in 2015-16.
China has slowed down significantly in July and August, QNB said. Growth in retail sales (10.5%) and industrial production (6%) fell in July. Exports dropped by a much larger than expected 8.3% in July.
August flash manufacturing PMI was the weakest since the financial crisis (47.1). Weak data prompted the authorities to surprise markets and devalue the currency on August 11. This has triggered major turmoil in global financial markets and led to steep declines in Chinese equities. The authorities responded by easing monetary policy and cutting rates.
And QNB expects further stimulus measures to be implemented this year in order for growth to reach 7% in 2015 and 6.4% in 2016.
On emerging markets, QNB said lower commodity prices and financial market turmoil are rattling EMs. China's surprise devaluation resulted in capital flight into safe havens. This led to the depreciation of the currencies of commodity-rich countries such as Indonesia, South Africa and Latin American nations, but also countries with large trade exposure to China such as Taiwan, Thailand and South Korea.
Vietnam followed China's steps by devaluing its currency, and lower oil prices forced Kazakhstan to abandon its peg to the US dollar.
"Overall, we expect EMs to grow by 3.5-4% in 2015-16," QNB said.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.