US economy strengthening but world economy highly unstable, says HSBC

HONG KONG – In updating its forecasts for global growth in 2015, HSBC says the world economy remains highly unstable, and that the US recovery is vulnerable to weakening demand elsewhere in the world, alongside a potentially much-stronger dollar – the more the rest of the world softens, the greater the risk that the US recovery comes to an abrupt end.

HSBC has lifted its forecast for growth in the United States from 2.6 per cent to 2.8 per cent in 2015, followed by 2.6% growth in 2016.

“The improvements in the US are offset by disappointments in Japan and the UK, and a marginal downward revision to the Eurozone,” says HSBC. “Our scalpel has been applied more aggressively to our projections for the emerging world.

“Of the major economies, the biggest cuts have been reserved for Brazil and Russia, both of which are likely to contract in 2015.  China has come down modestly, and thanks to both Chinese weakness and a very soft yen, we have also lowered our growth forecasts for the rest of Asia.”

HSBC’s forecast for GDP growth in emerging Asia in 2015 has been trimmed from 4.9% to 4.1%, for China from 7.7% to 7.3%, for Japan from 1.0% to 0.6%, and for India from 6.6% to 6.5%.  www.hsbc.com (ATI).