The first quarter of this year was pretty disappointing for the world economy. Much of the weakness in the macro figures is caused by temporary factors in the eyes of Jeremy Lawson, however, chief economist at Standard Life Investment.
Standard life mentioned in a report that the economic figures that came out recently in the US are disappointing. Sentiment, export, consumer spending… all of them went down in the last few months. Although the labor market was seemingly able to escape the same faith, a slight change in trend was also visible in the figures in March, according to Standard Life.
On the shoulders of the US
The big question according to Lawson now is whether the loss of economic momentum is just a temporary issue or not. In his opinion you could easily argue for both scenarios. However, although the US economy is healthier than many other economies, it is not strong enough to take the weight of the rest of the world on its shoulders, says Lawson.
According to McCann, another economist at the wealth management firm, it is ironic that the Eurozone has been able to remain unaffected by the problems. The economy actually picked up in the first quarter of the year in Europe, despite the disappointing global growth figures. The recovery was also visible everywhere in Europe, except in Greece.
Growth in Europe
The economist sees a number of drivers for this improvement of growth in Europe. McCann has pointed out the lower oil price as a reason, for example, a change that is not in the European Central Bank’s power. However, the monetary policy makers do deserve praise for the support they are giving.
Nevertheless we need to remain cautious. Although the improvement in the macro figures in Europe is encouraging, the region needs sustainable and lasting positive change in the reserve capacity. Furthermore, core inflation is still alarmingly low, which means the ECB will have to keep up its support measures for the foreseeable future.
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