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Predictions for Global Economy in 2016

Predictions for Global Economy in 2016

According to the International Monetary Fund’s estimate, the world’s GDP will be growing in 2016 and it will be a pleasurable change by 3.6% on average. It is an improvement by approximately one half of one percent in comparison with the previous year, generally speaking, however, it can be assumed that the richer a state is today, the slower the growth will be tomorrow.

Economy by region

Although Europe will do fairly good – its growth is estimated to a tiny bit under two percent – Asia will not be going through any kind of rapid development. Not even China will be able to change this; however favourable its last year’s growth by seven percent was, in 2016 it will be slower. The Forbes magazine disputes these numbers, too, as they seem to be over the top. Forbes also predicts the United States to be growing, even though typically American fields such as crude oil-related business or fast food market are experiencing a steep fall.

Czech revival of 2015

Czech economy finds itself is the best state since 2008, the nation is being reassured by analysts lately. The GDP of the Czech Republic was growing by four percent in 2014, mostly thanks to grants from the European Union, and the state’s budget deficit was 37 billion CZK lower than expected. The Ministry of Finance of the Czech Republic (MFČR) issued a report from its periodical fortieth colloquium, in which it admits that the Czech GDP growth will slow down to 2.5% and it will stay there for at least one more year.

On the other hand, the consumer price index will rise by 1.4% Nevertheless, MFČR adds that the volume of salaries and wages will grow by four percent, as much as it did last year. Our wallets will, therefore, be gaining weight twice as fast than how they did in 2014. Furthermore, the national average wage will – for the first time in history – reach the equivalent of 1000 EUR.

Employment

Banking institutes approached by MFČR expect employment to be growing but it will only be by a couple of tenths of one percent. Similarly, the unemployment rate should be decreasing slightly, at first, it will fall just under five percent and within three years it might even reach a record-breaking minimum of 4.7 percent. It would be the lowest unemployment rate in the Czech Republic since 1997. This time, however, banks do not share the enthusiasm. The most optimistic say it could plummet down to four percent, others, on the contrary, warn that the unemployment rate might just as well stay where it is now.

Unemployment rate
Source: Public database ČSÚ

Euro exchange rate

The respondents also expect euro’s exchange rate to return under 27 CZK, the turn will not be dramatic, though. The rate will not be falling under 25.5 CZK – a value the nation was used to in the years 2008 to 2012 – until at least 2018 as the Czech National Bank is not planning to stop intervening in the foreign exchange market and, therefore, diminishing the value of Czech koruna. Should this happen anyway, it will not be until 2017.

EUR-CZK rate
Source: Czech National Bank