Weekly Economic Briefing

The $74 trillion dollar question

25 July 2017

Global Overview

  • Many of the most pertinent questions facing the global economic outlook centre on policy - will the US Congress make progress on its legislative agenda, how will Brexit negotiations play out and how will the party congress in China shape the outlook for the next five years?
  • In the US, in addition to policy uncertainties, the path of business investment; labour productivity; and the impact they have on inflation and monetary policy remain key.
  • Monetary policy in the UK and Europe are key unknowns over the remaining months of 2017 - both how the BoE steers through higher inflation and an uncertain growth outlook, but also how the ECB guides a path to tapering.
  • Japan's Abenomics project is struggling. How Abe restores credibility to the Bank of Japan and handles the fiscal framework will be key to whether Abenomics can get back on track.
  • China will be the focus for the remainder of 2017. With the once-every-five year's party congress due this autumn, changes to senior leadership and guidance on policy direction will help shape the EM outlook.
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US

Whether or not business investment growth picks up and broadens, core inflation accelerates and Congress passes meaningful structural reforms are some of the main macro questions facing investors in the second half of the year.

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UK

The battle to understand the economic outlook in the UK continues, both for markets and the BoE. Meanwhile Brexit negotiation skirmishes are just beginning.

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Europe

In the Eurozone, the first half of the year got off to a flying start. However, ECB policymakers are likely to find it increasingly tricky to tread the tapering line.

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Japan & Developed Asia

Prime Minister Abe has some difficult decisions ahead. He will need to be bold despite the recent drop in his approval ratings.

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Emerging Markets

China is poised for both internal and external changes. The upcoming party congress will reshuffle the senior leadership and US pressures could force a change in the bilateral relationship.

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Standard Life Investments’ Global Strategy team provide regular analysis of the key economic data that has been influencing financial markets.

Available on a weekly basis, the Weekly Economic Briefing takes a detailed look at the global economic issues that have been impacting our investment strategy. The regional approach aims to provide an easy-to-navigate guide to the most recent developments in the global economy.

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