The 2020 Mid-Year Economic Update_long

‘Aura of Crisis’ Still Haunts Global Economy

MAPI report: Sluggish economies throughout world providing headwinds for U.S.
Eric-Smith-84x84

Distinct challenges facing other regions throughout the world are providing stiff headwinds for an otherwise improving U.S. economy, according to the MAPI Foundation's most recent Global Outlook.

"Six years past the trough of the Great Recession, the aura of crisis still haunts the global economic landscape and world economic gains are expected to remain sluggish through the end of 2016," says the report, titled the Elusive Search for Equilibrium.

Even as the U.S. economy grows stronger and more stable – albeit at a moderate pace – a variety of problems are plaguing different parts of the globe, helping the U.S. gain status as a "relatively healthy player in a weak world," wrote Cliff Waldman, director of economic studies for the MAPI Foundation, in the report.

“China's slowdown, thankfully not a hard landing, has been more protracted than many expected," Waldman wrote. "The recent data from the Eurozone, while a bit stronger, are being pushed into the background amidst the seemingly endless effort to resolve the Greek debt crisis. The Latin American economy has lapsed into a sluggish malaise with the emerging realization that fundamental reforms will be necessary if the region is to ever achieve sustainable prosperity."

Aggregate GDP growth in non-U.S. industrialized countries, which include Canada, the Eurozone, Denmark, the United Kingdom, Sweden and Japan, is predicted to be only 2.3 percent by the fourth quarter of 2016, significantly below the 3 percent to 3.5 percent range that is the norm for a period of global expansion.

Subpar non-U.S. global growth, the strong dollar and low oil prices will continue to stifle the U.S. economy, a forecast echoed elsewhere, including the second-quarter 2015 MDM-Baird Distribution Survey.

Distributors recorded just 1.8 percent revenue growth in the second quarter, according to survey respondents, down from 2.7 percent the previous quarter and down from 3.5 percent in the second quarter of 2014. And distributors project just 2.2 percent growth for the year, down from the 3.6 percent growth they projected just a few months ago.

Read more about the results of the second-quarter 2015 survey, including results by subsector, in the July 25, 2015, issue of MDM Premium.

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