5 key economic trends to watch in 2016
By Staff Writer
After the US Federal Reserve raising interest rate for the first time in almost a decade, economists and business analysts hold the view that growth may stabilize in 2016. Analysts come out with five major factors that will influence global economy this year. Some fear that already recessionary clouds looming over the global economy.
Majority of analysts opine that 2016 will also be more or less as same as it used to be in 2015. Many forecast tepid growth for 2016. Economists predict modest labor market improvement and low inflation for the US economy.
Forbes has listed the five key factors that would influence the global economy significantly. The five major factors are industrial production, consumer spending, international trade, currency trends and inflation. The 2015 witnessed industrial recession in the global economy.
Economists predict that global industry may witness more layoffs in 2016. Global industry can't stabilize owing to several factors. The slowdown in international trade, surging US dollar and rising inventories will impact the global economy in more negative way.
The ongoing energy glut may not ease immediately, while the balance should improve as new supplies quit worsening the glut. The growth rate of income is expected to increase as labor market is growing. The lower energy costs help consumers spend more, as reported by The Wall Street Journal (WSJ). However, the consumer spending is yet to catch up with rising household cash flow.
Economists in a survey by The Wall Street Journal, forecast 2.6 percent growth for 2016. The US Federal Reserve officials predicts growth rate of 2.3 percent to 2.5 percent. The US unemployment rate is forecast to come down to 4.7 percent or 4.8 percent by end of 2016.
International trade is most important factor for the US production and global economy. The surging US dollar is affecting US exports and global economy as well. The construction industry is staging a comeback on the growth path. The wage growth may add to the housing sector's development.
Detroit Free Press reports that the uncertainty about economy growth in China and other emerging economies would be a major factor for the world's largest economy. The stronger US dollar is also making US products expensive for emerging markets. The auto industry in the US is expected to grow in 2016.
The rising interest rate and forex fluctuations would impact global economy significantly. Europe may continue to resist monetary infusions, while Japan is expected to become more cautious on its budget controls.
The overcapacities in the global economy restrained price rise. Inflation is expected to rise in 2016. The drop in energy prices will propel inflation rate upwards. The aviation industry may witness more consolidation process.
No economists or business analyst is bullish on 2016 as expectations were eroded during the past few months.