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Flash Economics Summary: Is the United States a Threat to Global Growth?

Core Content

This document from Natixis analyzes the potential impact of new U.S. economic and international policies on global growth. It outlines three main risks that could threaten global economic expansion due to the U.S. policy changes and their ripple effects on international markets.

Main Risks

1. Deterioration in the Situation of Emerging Countries

• Monetary Policy Normalization: The U.S. is raising interest rates, which is expected to continue due to fiscal expansion and the risk of overheating (Chart 1B).
• Rising Risk Aversion: Increased geopolitical tensions and U.S. policies have led to heightened risk aversion (Charts 3A and B).
• Capital Outflows: These factors may result in capital withdrawals from emerging markets (Charts 5A and B).
• Exchange Rate Depreciation: Emerging countries may experience currency depreciation (Chart 6A).
• Inflation and Interest Rates: Exchange rate depreciation could lead to higher inflation and interest rates in these countries (Chart 6B).
• Growth Decline: As a result, growth in emerging countries is expected to fall (Chart 6C).

2. Rising Borrowing Costs for Companies

• Risk Premia Increase: Companies in OECD countries are paying higher risk premia on various types of financing (equities and bonds) due to rising risk aversion (Charts 7A, B, 8A, B, C, D).
• Impact on Investment: This increase in borrowing costs could lead to a downturn in corporate investment (Chart 9).
• Current Situation: Although the downturn is not yet expected, the trend is present (Charts 10A and B).

3. Rising Oil Prices

• Geopolitical Tensions: Increased tensions in the Middle East and renewed sanctions on Iran have driven up oil prices (Chart 11).
• Negative Impact on Growth: Higher oil prices negatively affect growth, especially in OECD countries and non-oil-producing emerging economies, due to increased energy import costs and loss of real income (Charts 12A, B, and C).

Key Information

• The U.S. is implementing monetary policy normalization, expansionary fiscal policy, immigration curbs, protectionism, and sanctions on Iran and Russia.
• These policies may lead to capital outflows, rising risk premia, and increased oil prices, all of which could negatively impact global growth.
• The document is confidential and intended for professionals and qualified investors only.
• It does not constitute a personalized investment recommendation or a financial analysis in compliance with legal requirements.
• Disclaimer: The views expressed are those of the authors and do not necessarily reflect the views of Natixis or any of its affiliates.

Conclusion

• The new U.S. economic and international policies may indeed pose a threat to global growth through:

  • Negative effects on capital flows to emerging countries.
  • Increased corporate borrowing costs.
  • Positive (i.e., upward) pressure on oil prices.

• The current trends suggest that capital outflows, rising risk premia, and increased oil prices are already emerging, indicating potential global economic challenges.

Legal and Regulatory Information

• The document is subject to confidentiality and distribution restrictions.
• It is supervised and regulated by various authorities, including the European Central Bank (ECB), ACPR, AMF, FCA, and BaFin.
• In Canada, Australia, Hong Kong, and the United States, specific regulations apply to the distribution and use of the document.
• The author(s) of the report certify that the views expressed reflect their personal opinions and are not influenced by compensation.

Disclaimer Summary

• The information is not updated and should not be relied upon for future decisions.
• No liability is accepted for any use of the document or its contents.
• No guarantee is made that the recommendations or views will lead to profitable transactions.
• The document is not a complete analysis of all material facts and is based on public information only.