20180807-招银国际-Economic_Perspectives__Global_Economy_Monthly_Update_7页_1mb

Economic Perspectives Summary

Core Content

This document provides a monthly update on the global economy, highlighting the divergent performance of major economies and the implications for monetary policy. It outlines the economic outlook for the United States, Eurozone, United Kingdom, Japan, and Hong Kong, with a focus on GDP growth, inflation, and central bank responses. The report also includes key forecasts and warnings about trade tensions and political uncertainties.

Main Views and Key Information

United States: Growth Might Be Peaking

• GDP Growth: 2Q GDP surged to 4.1%, the fastest pace in nearly 4 years.
• Growth Drivers: Strong consumer spending (2.7%) and net exports (1.1%) were the main contributors to growth.
• Risks:
  • Higher oil prices boosted oil production but introduced volatility.
  • Trade tensions led to a surge in exports due to inventory stockpiling and pre-tariff sales.
  • Tax cuts' stimulative effects are fading.
  • Protectionist tariffs are beginning to impact the economy.
• Monetary Policy: The Fed left interest rates unchanged but signaled potential rate hikes in the future.
• Inflation: Inflation remains moderate, with the Fed likely to keep rates low for now.

Euro Area: Hard to Regain Momentum

• GDP Growth: Slowed to 0.3% QoQ in 2Q, the weakest in two years.
• Inflation: Inflation rose to 2.1% in July, but core inflation (excluding energy and food) is only 1.1%.
• Monetary Policy: The ECB plans to end its QE program in December 2018 and may keep rates at record lows until 2019.
• Trade Agreement: The US-EU trade agreement signed in July could stabilize sentiment.
• Brexit Risk: Ongoing Brexit negotiations remain a significant downside risk.

United Kingdom: A Rate Hike amid Brexit Uncertainties

• Interest Rates: The BoE raised rates to 0.75%, with a neutral rate estimated at 2–3%.
• Growth Outlook: Expected to pick up in 2Q and 3Q, with service and retail sales showing improvement.
• Brexit Impact: Brexit remains the biggest risk, with political infighting and lack of a clear plan increasing uncertainty.
• Currency Vulnerability: The pound is highly sensitive to political developments.

Japan: Struggling with Low Inflation

• Economic Recovery: Expected to rebound in 2Q18 after a contraction in 1Q18.
• Inflation: Inflation remains low, with CPI at 0.7% YoY in June and core inflation at 0%.
• Monetary Policy: The BoJ has revised its inflation forecast down and plans to keep monetary policy unchanged until October 2019.
• Labor Market: Tight labor market and continued growth in retail sales over eight months.
• Natural Disasters: Recent disasters may affect 3Q18 economic performance.

Hong Kong: So Far So Good

• GDP Growth: Expected to grow at 4.0% in 2018, with a 12% YoY increase in retail sales in June.
• Labor Market: Unemployment remains low at 2.8%, and the labor market is expected to stay tight.
• Inflation: CPI rose to 2.4% YoY in June, showing moderate inflationary pressures.
• Trade Tensions: Trade tensions may impact the economy, although their direct effect on Hong Kong's trade is limited to 1–2% of total trade.
• Property Market: Private property prices have been rising for 27 consecutive months.
• Monetary Policy: The HK government and companies must prepare for quick adjustments due to rising costs and trade jitters.

Global Economic Forecast (2017A–2019E)

Key Takeaways

• The US economy is growing strongly, but risks are rising due to trade tensions and fading tax cut benefits.
• The Eurozone is struggling to regain momentum, with growth slowing and inflation remaining below target.
• The UK faces significant challenges from Brexit, but has seen a rate hike to control inflation.
• Japan continues to battle low inflation, with the BoJ maintaining an ultra-loose monetary policy.
• Hong Kong shows resilience with a tight labor market and strong retail sales, but trade tensions may introduce new risks.

CMBIS Ratings

• BUY: Stock with potential return of over 15% over next 12 months.
• HOLD: Stock with potential return of +15% to -10% over next 12 months.
• SELL: Stock with potential loss of over 10% over next 12 months.
• NOT RATED: Stock not rated by CMBIS.

Disclaimer

• The information provided is for educational and informational purposes only.
• No investment advice is given, and the report should not be used as a basis for investment decisions.
• Risks are inherent in any investment, and actual outcomes may differ from forecasts.
• CMBIS does not guarantee the accuracy, completeness, or timeliness of the data or analysis.
• The report is not an offer or solicitation to buy or sell any security.