Weekly Economic Briefing

Half Year Report

28 July 2015

Global Overview

  • Global growth disappointed yet again in the first half of the year, as stronger growth in Europe and Japan was unable to offset a sharp slowdown in many emerging markets and another winter contraction in the US. Emerging market-developed market fortunes will continue to diverge in the second half of 2015.
  • US domestic demand will rebound over coming quarters and the labour market will tighten further, enabling the Fed to begin normalising interest rates. However, the supply-side of the economy remains lacklustre.
  • Britain’s recovery is maturing, underpinned by solid household demand and improving business investment. Labour market dynamics have changed of late, as productivity finally appears to be improving.
  • The Eurozone also enjoyed strong growth figures, thanks in no small part to QE and strong domestic demand. Japan is the other star pupil and is expected to beat potential growth estimates for this year and next.
  • There are few bright spots in EM. Commodity exporters were expected to suffer from the plunge in prices but importers are also struggling with reduced demand from China and more localised problems.


Our half-yearly report card shows that the output and employment gaps are continuing to fall but inflation remains too low and the supply-side of the economy is in poor shape.



The UK economy continues to do well, although growth has slowed from stellar rates in 2014. With the labour market continuing to normalise, the Bank is tentatively preparing for rate hikes.



The Eurozone economy is meeting raised growth expectations as the recovery becomes more entrenched. This should support inflation, but not fast enough to cause a change to ECB policy.



The Japanese economy has outperformed so far this year but a more aggressive shift in investment and consumption behaviour will be required to meet upbeat expectations over the coming years.


Emerging Markets

Emerging market economies disappointed in the first half of 2015. Growth slowed as expected in Russia, Brazil and China, but the real surprise was broad-based weak domestic demand.


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.

The views and conclusions expressed in this communication are for general interest only and should not be taken as investment advice or as an invitation to purchase or sell any specific security.

Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier(s) (the "Owner") and is licensed for use by Standard Life**. Third Party Data may not be copied or distributed. Third Party Data is provided "as is" and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Standard Life** or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates.

**Standard Life means the relevant member of the Standard Life group, being Standard Life plc together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time.