Global Economic & Market Outlook | Eurobank
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Global Economic & Market Outlook

• Global growth is expected to soften somewhat but remain fairly robust into 2007, despite the US slowdown, as Japan, emerging Asia and Europe are due to maintain their positive momentum.
• US growth is expected to moderate significantly in 2007 to a more sustainable level of around 2.3% y-o-y from 3.4% y-o-y in 2006, as a result of the downturn in the housing market.• The Fed is likely to hike once more by 25bps in Q1:07 as core inflation remains elevated. Fed funds are likely to decline in H2:07 to support economic activity. The ECB will likely hike rates to 4% by mid-07 and go on hold afterwards.
• With a slowing economy and increasing pressure from unit labour costs on profit margins, corporate profit growth in the US is expected to decelerate sharply in 2007. The profit slowdown will be the major theme in 2007.