Global Growth: Headwinds or Tailwinds?Feb 15, 2015

Key Points

Excessive pessimism characterizes the current view on the global growth outlook. Many observers see the lowering of global growth forecasts by the World Bank and the International Monetary Fund (IMF) as confirming a loss of global economic momentum. Some of this pessimism also reflects a mistaken interpretation of the reasons behind the recent sharp decline in oil prices, and of its likely consequences. Many analysts and commentators have argued that the plunge in oil prices reflects the slowing down of the global economy, and some believe that the decline in oil prices itself will have a negative impact on global growth, by reducing energy investment and causing deflation in some regions. As for key economic areas, while most observers are more upbeat on the US, many observers seem to expect a major slowdown in China and to view the eurozone as being on the brink of recession.