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The following is an extract from IHS Markit's latest Week
Ahead Economic Preview. For the full report (including Special
Reports) please click on the link at the bottom of the
article.
FOMC meeting including updated projections and interest rate
'dot plot'
First ECB meeting with Lagarde at the helm
UK election, EU leaders' summit
After a week in which the business surveys provided key updates
on the health of the global economy mid-way through the fourth
quarter, the economic data take a back seat to policy and
politics.
With the pace of global growth picking up to a four-month high
in November according to PMI survey data, there are signs that the
recent easing of monetary policy from many of the world's central
banks has helped stem the slowdown, though the overall rate of
expansion remains among the lowest since 2016. The coming week sees
policy decisions from the FOMC and ECB, both of which have loosened
policy this year to safeguard against the recent global headwinds
and boost growth. Although both are expected to keep rates on hold,
the economic projections and rhetoric will be scrutinised for clues
as to future policy direction.
We see further stimulus from the ECB on the cards for early
2020, with Christine Lagarde having now taken over the helm, but
the FOMC looks set to continue to sit on its hands for an extended
period barring any material changes to the outlook.
Trade wars remain a key concern for the global outlook, and
escalating tensions could set back the nascent improvement in the
global growth trend. Developments in US trade with China, with new
tariffs on Chinese goods set to kick-in on 15th December, will
therefore be closely watched.
Brexit is also high on the list of global worries, and the
upcoming UK general election on 12th December will be a key
development in determining the outlook for the UK's departure from
the EU. Polls are hinting at a Conservative party majority, which
would lead to Brexit stepping up a gear. The EU Leaders' Summit
will also be monitored for Brexit-related developments in
particular.
In Asia Pacific, a raft of data for China, Japan and Taiwan will
be eyed for signs of economic trends. Policy action will come from
the Philippines, while a speech from RBA governor Philip Lowe will
be parsed for clues about future policy direction.
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
