2016 Global Economic Growth Projection

Global economic growth in 2016 projected at 3.8%. One of its main cause is the economy of United States, which roughly increased by 3% and India at 7.5%. China is expected to have a decreasing growth in its economy by 0.5% leaning towards 6.3%.

There are few indicators that represent United States’ growth in macro economy. Economic growth realization in 2Q15 went to 3.7% YoY. Even realization at the year-end will be greater than International Monetary Fund’s Projection about 2.5% YoY. Unemployment statistics are decreasing significantly, reaching 5.1% in September 2015. It has been decreasing for 1% since August 2014. Inflation is still in negative at -0.2% as per September 2015.

Negative inflation shows that consumers are still holding themselves back in term of transactions, this will not looking good if bank rate is still going to increase since it will result in worse consumption sector. Labor sector in US also holding several issues where unemployment statistic already reached 5.1 percent while inflation still decreasing to -0.2% from 0.1% per July. While the number of labor worker is increasing, the numbers are gained majorly from part time segment while labor workers in Industry and Agriculture sectors are decreasing per September 2015.Data Bureau of Labor Statistics (2015) showing that labor participation as per September 2015 still in 62.4%. It shows that number of workers is not actually increasing. They are just switching from one job to another, or working with less working time / schedule.

European Union’s economic growth projected to reach 1.5% by the end of 2015. Realization until 1Q15 reached 1.01%. European Union’s economic growth for 1Q15 was affected by the price of world oil which has been decreasing. This occurrence helps increasing the consumption sector to grow even better. European Union’s performance also got helped by Quantitative Easing from ECB. QE successfully reduced deflation issue. ECB bought obligation worth EUR 60 bn per month from March – September 2015. If inflation still cannot reach 2% then the program may be continued.

In 2Q115, China still grows 7%, 6.9% above Reuters pool’s prediction. Industrial output at June 2015 increased by 6.8% and also above Reuters pool’s prediction (6%). Retail selling at May 2015 increased by 10.6% (10.2% above Reuters pool’s prediction). To boost its economy, People Bank of China cut its rate and reserve requirement ratio.