Global GDP growth slowed only very marginally in Q3, to about 3.0% year-in-year, in line with my October forecasts. Perhaps even more surprising is World Bank data pointing to quarterly growth having flat-lined at 2.5% yoy between Q2 2014 and Q3 2015. Year-to-date growth and the up-tick in global PMIs in October-November support the IMF’s prediction of 3.1% GDP growth in 2015, down only marginally from 3.4% in 2012-2014. So while global trade, inflation and commodity prices have fallen sharply this year, global growth has not thanks in part to resilient consumer demand. This may, at the margin, have given the US Federal Reserve the confidence to hike its policy rate. But the slowdown in global growth in 2015, despite still record low global policy rates and eurozone quantitative easing, does not provide much cheer for next year.

1. The global growth collapse that never was but may still be
Global GDP growth slowed only very marginally in Q3, to about 3.0% year-in-year, in line
with my October forecasts. Perhaps even more surprising is World Bank data pointing to
quarterly growth having flat-lined at 2.5% yoy between Q2 2014 and Q3 2015.
Year-to-date growth and the up-tick in global PMIs in October-November support the IMF’s
prediction of 3.1% GDP growth in 2015, down only marginally from 3.4% in 2012-2014.
So while global trade, inflation and commodity prices have fallen sharply this year, global
growth has not thanks in part to resilient consumer demand. This may, at the margin, have
given the US Federal Reserve the confidence to hike its policy rate.
But the slowdown in global growth in 2015, despite still record low global policy rates and
eurozone quantitative easing, does not provide much cheer for next year.
Q3 GDP data are out…and it’s not that bad
Global real GDP growth in Q3 slowed only marginally to 3.0% year-on-year (yoy) from 3.1% yoy in Q2,
according to my estimates using IMF purchasing power parity (PPP) weights (see Figure 1)1
. Countries
which have so far released Q3 GDP data account for about 95% of world GDP.
This marginal slowdown is line with my October forecast (see Global growth down but not out) and broadly
in line with World Bank data pointing to stable GDP growth in Q3 of 2.5% yoy (see Figure 1)2
.
1 These are estimates as the IMF does not release quarterly GDP data.
2 The World Bank and IMF use different country weights, which explains the difference in their estimates of global
growth. The IMF uses purchasing power parity weights, the World Bank market weights. The IMF attributes a greater
country weight to China’s GDP growth rate, which has slowed sharply and thus weighed more greatly on the IMF’s
measure of global growth.

2. Figure 1: Global growth has slowed marginally, not collapsed
Source: IMF, World Bank
Note: Estimate of real GDP growth using IMF 2011 PPP weights
Global GDP growth in the first three quarters of 2015 was about 3.1% yoy, suggesting that the IMF’s
growth forecast of 3.1% for the full-year is still attainable (see October World Economic Outlook). Indeed,
global manufacturing PMI data, which have historically correlated reasonably well with global growth,
suggest that growth was stable or slightly stronger in Q4 (see Figure 2). The average PMI in October-
November ticked up to 51.25 from 50.8 in Q3.
Figure 2: The pick-up in global PMI points to 3% yoy or slightly faster GDP growth in Q4 2015
2.0
2.5
3.0
3.5
4.0
48
49
50
51
52
53
54
2012Q4 2013Q2 2013Q4 2014Q2 2014Q4 2015Q2 2015Q4
Global Manufacturing PMI (left scale) Global real GDP, % year-on-year (IMF methodology)
-6
-4
-2
0
2
4
6
8
1996-Q4 1999-Q2 2001-Q4 2004-Q2 2006-Q4 2009-Q2 2011-Q4 2014-Q2
IMF estimate World Bank
Real GDP growth, % year-on-year

3. Source: IMF, JP Morgan Markit
Note: Last PMI data point is October-November 2015 average, Q4 2015 GDP growth is my forecast
No clear unifying theme emerges when we turn to individual countries, with emerging economies at both
extremes of the growth spectrum and developed economies dotted across. India and China still lead the
growth race, if their official numbers are reliable, while growth in Brazil and Russia has slumped in tandem
with collapsing commodity prices. Spanish GDP growth rose to 3.4% yoy in Q3, GDP in the US and UK is
growing at a commendable 2.5%, while France, Italy and Japan still lag on sub-1% growth (see Figure 3).
Figure 3: Country growth rates show no clear unifying theme
Source: World Bank
Note: Global growth rate based on IMF PPP country weights
So while global trade, inflation, and commodity prices have fallen sharply this year, global growth has not.
One reason is that consumer demand for goods and services has been reasonably resilient, shored up by
rising employment and wage growth in the US, UK and lesser extent eurozone. In China, the manufacturing
sector is losing ground but the service sector is enjoying decent growth. This may, at the margin, have
given the US Federal Reserve the confidence to finally hike its policy rate this week.
But the slowdown in global growth in 2015 to multi-years lows is still somewhat concerning given how lose
interest rate policy has remained and the limited scope for further significant, effective, monetary policy
stimulus. The ECB quantitative easing program is now one year old, policy rates in the US, UK, Japan and
eurozone are near zero, policy rates in three European countries are negative and most major central
banks have cut rates (including Australia, Canada, China, India, Indonesia, Korea, New Zealand, and
-6
-4
-2
0
2
4
6
8
India
China
Indonesia
Turkey
Global
Spain
US
Mexico
UK
Korea
Australia
SouthAfrica
Germany
Canada
Taiwan
France
Italy
Japan
Brazil
Russia
Real GDP in Q1-Q3 2015, % year-on-year

4. Turkey). The IMF, OECD and World Bank may arguably have to again revise down their 2016 growth
forecasts, which currently stand at 3.6%, 3.3% and 3.3% respectively.