Finance ministers from the world’s largest developed economies meet in Germany this week against a backdrop of faltering global growth, scant inflationary pressures and a bond market in turmoil.
High on their agenda – even if unofficially – will be Greece and how it can stay in the troubled eurozone. Figures due on Friday from the US – that will almost certainly show the world’s biggest economy contracted last quarter – are also likely to feature.
With business growth slowing in the eurozone and factory activity contracting again in China, market watchers have been looking to the United States to drive a pick-up in growth.
But a preliminary Reuters poll last week predicted that adjusted first quarter US GDP numbers due on Friday would be massively revised down and show a 0.7 percent contraction in the first three months of this year.
“The poor Q1 2015 performance follows growth of just 2.2 per cent in Q4 2014, so there has been very little growth over the last couple of quarters,” said Joseph LaVorgna, chief US economist at Deutsche Bank “As a result, market participants have started to wonder again whether the US economy might be in an extended period of secular stagnation.”
Revised gross domestic product numbers from Britain on Thursday should say the country’s growth at the start of the year was slightly better than first estimated, at 0.4 per cent.
Tomorrow, Prime Minister David Cameron will put forward his government’s legislative plans after his Conservatives won a surprise majority in the May 7 election.
India will also publish GDP numbers on Friday, with economists predicting Asia’s third largest economy expanded a relatively modest 7.4 per cent between January and March.
Economic activity in Brazil tumbled in the first quarter, its central bank’s IBC-Br index suggested on Thursday, and GDP numbers on Friday are likely to confirm that contraction.
Japan’s central bank has been struggling to get any meaningful inflation for decades and despite near-zero interest rates and many multi-trillion yen stimulus programmes, numbers due on Thursday will show little inflationary pressure.