Ms Flanders adds: “The US can probably shrug off the disinflationary effect of cheaper Chinese imports because domestic prices – and finally wages – are picking up as America’s domestic, consumer-led recovery continues to move ahead. But globally, the picture is not nearly as strong.”
She points to the International Monetary Fund’s (IMF) latest global forecasts showing consumer inflation at just 0.7 per cent in 2016. “At 3.1 per cent the latest global growth forecast for 2016 is only slightly lower than the April number,” she explains.
“This has been taken as more evidence that the negative effects of Brexit are likely to be centred on the UK. But a year ago the IMF was expecting global growth this year to be 3.8 per cent, and growth for the advanced economies to be 2.4 per cent. Now its best guess is for growth of 1.8 per cent in those countries – and not just in 2016 but in 2017 as well.”
Whether central banks or governments have anything left up their sleeves to rejuvenate global growth remains uncertain.
Ellie Duncan is deputy features editor at Investment Adviser