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March 29, 2016 | 12:35 | Dubai
Standard Chartered expects no more Fed hikes and for China to avoid a hard landing, with an expectation that oil prices will rebound further. Momentum in the world economy is likely to remain sluggish, but sentiment should improve as markets readjust their expectations.
“Global growth is anaemic and large parts of the world economy, especially in the West, are likely to be in stagnation this year. It is difficult to get excited about the stagnant world economy. But it is not all negative. A recession, in the absence of shocks, should be avoided. And our expectations of no further rate hikes in the US, along with stable growth and better communication from China, should be positive for sentiment – particularly for markets in Asia,” Marios Maratheftis, Chief Economist, Standard Chartered commented.
Standard Chartered’s economic outlook for 2016 opined that sentiment towards emerging markets would be weak at the beginning of 2016, but that markets would regroup and rebound despite anaemic global economic growth. The negativity on emerging markets has been driven by expectations of Federal Reserve interest rate hikes, concerns about China and the collapse in oil prices. The bank has lowered its 2016 global growth forecast to 2.5% from 3%, as it expects the two major drivers of the world economy, the US and the euro area, to be in stagnation this year; US growth is expected to be only 1% per cent and euro-area growth 1.4%.