Global Themes - EM Investment Will Continue Outpacing DM
Weak fixed investment growth is damaging the potential growth trajectory in Europe and the US. At this stage, though, we expect to see an improvement in developed market fixed investment relative to emerging markets.
In emerging markets the impact of rapid investment ranges from the benign (particularly for economies that still have low capital stock and are embarking on catch-up growth) to the systemically destabilising. Overall, the continued rapid expansion in emerging market fixed investment suggests that global rebalancing still has a long way to go.
We forecast fixed investment in China to be much more muted over the next decade than the previous one, which helps inform our below-consensus real GDP growth forecasts for the country.
|EMs Lead The Charge|
|Global - Real Fixed Capital Formation Index, 1970=100|