Client support: Phone: (+357) 22314160

FX & CFD trading involves significant risk


Show news:

27.06.2016 06:20

UK enters a mild recession by early 2017 - Goldman Sachs

According to a Goldman Sachs client note the most significant change is a sharp cut in our UK GDP forecast by a cumulative 2¾% over the next 18 months, which implies that the UK economy enters a mild recession by early 2017.

"We have also reduced our Euro area GDP forecast by a cumulative ½%, which implies an average growth rate of 1¼% instead of 1½% for the next two years, and have shaved our US GDP forecast for the second half of 2016 by ¼pp to 2%.

There are three economic transmission mechanisms for the Brexit shock.

First, the UK terms of trade are likely to deteriorate, especially if it becomes harder to export high-value added services (including financial services) to the European Union. This is probably the most important shock from a long-run perspective, although its size is highly uncertain because we do not yet know how much access the UK will ultimately have to the Common Market.

Second, the uncertainty about the long term is likely to weigh on UK growth in the short term as firms hold off on investment. There is a substantial body of economic research showing that uncertainty shocks have large negative macroeconomic effects. Our European economics team views the uncertainty shock as the main near-term drag on UK growth.

Third, outside the UK the main transmission channels are weaker UK demand for imports and-much more importantly-a tightening of financial conditions via a stronger exchange rate and lower risk asset prices.

Taking as given the hit to UK GDP projected by our European economics team and the changes in financial conditions seen on Friday, we use the model to estimate the impact of the Brexit shock on growth in the major economies over the next two years. We then feed the GDP hit into an inflation hit via a Phillips curve relationship that also has a role for exchange rate pass-through.

And finally, we feed both the GDP hit and the inflation hit into a change in the warranted short-term interest rate via simple Taylor rule relationships.[3] The upshot is that the assumed hit to the UK and the moves seen in financial markets so far imply only moderate economic spillovers. The GDP effects are consistent with the forecast adjustments in the Euro area and the US already announced, although they suggest that Japan is at risk of even weaker growth than our Japan team's ½-1% forecast for 2016-2017 if Friday's FCI tightening does not reverse. The inflation effects are generally very small; only Japan sees a hit of more than 0.1pp because of the size of Friday's trade-weighted yen appreciation. And finally, the monetary policy effects are moderate, with a reduction in the warranted policy rate relative to the baseline of between 20bp in the US and 50bp in Japan".

27.06.2016 06:30

WSE: Before opening

Market Focus

  • U.S.: Industrial Production (MoM), September 0.1% (forecast 0.2%)
  • Britain can't get full single market access with free movement concessions - Merkel
  • Earnings Season in U.S.. Major Reports of the Week
  • New Zealand CPI, 3Q: 0.2% q/q (forecast 0%), 0.2% y/y (forecast 0.1%)
October 2016
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
  • 2010
  • 2009
  • 2008
  • 2007
  • 2006
  • 2005
  • 2004
  • 2003
  • 2002


All posted material is a marketing communication solely for informational purposes and reliance on this may lead to loss. Past performance is not a reliable indicator of future results. Please read our full disclaimer.

To maximize our visitors browsing experience TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies. If you disagree, you may change your browser settings at any time. Read more

  • © 2011-2016 TeleTrade-DJ International Consulting Ltd

    TeleTrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

    The company operates in accordance with Markets in Financial Instruments Directive (MiFID).

  • The information on this website is for informational purposes only. All the services and information provided have been obtained from sources deemed to be reliable. TeleTrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

  • TeleTrade cooperates with SafeCharge Limited, which is an electronic money institution authorized and regulated by the Central Bank of Cyprus and is a principal member of MasterCard Europe and Visa Europe. We also cooperate with Moneybookers and Neteller, which offer electronic e-wallet services authorized and regulated by the Financial Conduct Authority.

    Please read our full Terms of Use.

  • To maximize our visitors browsing experience TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies. If you disagree, you may change your browser settings at any time. Read more

    TeleTrade-DJ International Consulting Ltd currently does not provide its services to residents or nationals of the USA, and also doesn't provide retail Forex and CFD accounts to residents or nationals of Belgium.

Служба технической поддержки:

  • Онлайн-консультация
  • Заказать звонок
  • Написать письмо
Connect with Us
Share on
social networks
Request a callback
Top Page