After an eventful 2015, where we witnessed the first US rate hike in 9 years, crude oil dropping to 6 year lows, a dramatic selloff in Chinese equity markets and an unexpected abandonment of the Swiss Franc-Euro currency cap, we head into 2016 with global markets on tenterhooks. In this article, we analyze the 4 most important risks that global central banks will face while trying to bring their respective economies back on the growth track.
1. A Chinese Economic Slowdown, Dragging Asian EM Countries Down With It
Earlier this year, S&P downgraded China’s growth forecast for 2016 to 6.3% from 6.6%, and for 2017 to 6.1% from 6.3%. While China has been attempting “flexible and forceful” monetary & fiscal stimulus measures to get its economy back on track, there has been no significant indication of GDP growth bottoming out so far.