G20, Real GDP YOY%
2016201720182019E2020E2021E
G20, Real GDP YOY%1.82.41.521.92.9
Argentina-3.13.9-3.5-0.42.73.2
Australia2.12.82.82.82.72.7
Brazil-2.71.41.32.52.52.2
Canada1.532.121.71.8
China6.76.86.56.266
France0.92.71.41.61.51.7
Germany1.82.61.11.61.51.4
India6.86.37.17.37.47.5
Indonesia55.15.25.15.35.6
Italy0.91.70.710.91
Japan0.92.10.90.50.7
Mexico2.11.52.52.12.12.9
Russia-0.21.51.51.61.5
Saudi Arabia2.1-1.41.62.42.12.1
South Africa0.91.611.71.91.8
South Korea2.93.12.62.62.8
Turkey3.112.93.6
United Kingdom1.91.81.51.61.5
United States1.52.22.51.91.8
[Neutral] Teg: Brazil

Brazil is going through real serious budget problems: aging of population with the trimming of social security spending. This is the main drawback for growth potentials of the country . Most people thinks the future election may help. I am skeptical to this. I would suggest to increase pension age and to invest heavily on to the sectors to replace imports.

[Negative] Teg: Germany

I guess that aging society of German is the main challenge for its economy. In the logic the government should accelerate special education for immigrants in order to promote solid economic growth. But of course this is very sensible thing which may be in the agenda in minimum 5 years.

[Positive] Teg: Russia

I heard that notwithstanding the sanctions a lot of German businessmen are keen to invest and 2-3 times more right after the presidential election. I personally met about 10 good wealth persons. In my estimates this would give 2-3pp. more in GDP. I bet that Russia is one of the top country to invest in amidst emerging markets.

[Negative] Teg: United Kingdom

I would suggest that all situation over Skripal Case was done by internal forces of Great Britain itself, by the community against Teresa Mai. I believe that they just set her up (to make her as a scapegoat). This is the easiest way and method for internal political struggle. Well, this in coupe with high level of debt against European Union due to Brexit leaves us with no driver for growth in economy of Great Britain. At least, very modest opportunities.

[Neutral] Teg: United States

In the near term (1-2 year), I expect that Trump administration will be able to accelerate US economy growth: 1) 'Tax Cuts and Jobs Act' (that assumes decrease in corporate tax) and 'Bipartisan Budget Act of 2018' (that assumes to raise the spending limits for both defense and non-defense funding). 2) Protectionist policy: possible NAFTA cancelation, exit from TPP, recently announced import taxes for steel and aluminum, etc. However, one should note that even in near-term there are some issues that could limit the positive effect of proposed measures. First, unemployment rate is at the lows, thus, additional spending could lead to higher inflation (not real activity). Second, interest rates are likely to be risen that lower demand. Third, effect for real investment growth due to proposed tax cut could be overestimated (capital costs have been very low for a long time, but investment growth was modest). Nevertheless, I think that major concern is US economy's long-term perspective. Proposed measures will increase fragility of US economy due to increased risks and, as a result, I assume that negative scenario is quite possible: 1) higher interest rates: decreasing of demand on US Treasuries (as other assets will become more attractive) coupled with supply increasing (to finance proposed program), 2) significant decreasing in government stimulus after 2020 due to need to maintain increased debt with higher interest rate, 3) higher inflation, 4) overall cost increasing in economy as a result of protectionism

[Neutral] Teg: Saudi Arabia

I expect that Saudi Arabian economy growth will accelerate on the back of higher oil price (thus, higher domestic demand) and higher oil production. Despite these results, risks remain high due to low economy diversification. That is why long-term stability of growth is rely on implemented National Transformation Program, and Crown Prince Mohammed bin Salmana shows strong signal to investors longer-term commitment to continue the reforms. However, the question is about money for these reforms as budget deficit increasing. Additional factor that makes matters worse is increasing poverty level and, thus, increasing social unrest.

[Negative] Teg: United States

The US economy is one of the most diversified national economies in the world and has been leading the world economy for the last 100 years. The US is having strong growth momentum and I think this trend will continue in 2018-2019. The strong labour market data will keep the Federal Reserve on a steady path of monetary tightening, so I expect an additional rate increase during 2018-2019. Geopolitical concerns in Europe and better-than-expected economic data of the US are driving the price of US dollar, however, the renewed trade war jitters may pause US dollar's rising anytime. In addition, I expect further growth of the US economy given by significant support from the tax reform and the budgetary expenditure

[Negative] Teg: China

I expect the slowdown in China's economic growth in the near-term, driven by reduction in domestic demand, which would be the main constraint on achieving ambitious plan of the government for economic expansion. Also I think that slowdown in industrial production will continue its negative trend and will lead to volatility in domestic financial markets, based on concerns about risks related to the trade outlook. Probably, US-China trade tensions will fresh strain and will make a negative direct impact on the Chinese economy. That's why I have bearish view on China's economy in the mid-term.

[Positive] Teg: France

I guess that economic growth of France has remained solid. The government plans: (a) to decrease the share of government spending by 3 p.p. (in terms of GDP) over the next 2 years (2018-2019), incl. cutbacks in subsidised jobs and housing subsidies, (b) to reduce corporate income tax from 33% to 25%, (c) to cut in capital income, wealth and taxes on property.

[Neutral] Teg: Japan

In Japan, growth trend is set to be maintained in 2018, but weaken thereafter as fiscal policy will benefit from planned consumption tax increase. I revised the growth less than 1% for the next years. As I think there is only one possibility to climb at 1% on even more is the expected growth of Global Demand, obviously from Main 3 (USA, China, EU). As per the USA and China - new incentives over softening of tax burdens on corporates - expected to be aggressive using Trump's words. Thus, import is the main driver for the economy of Japan. As It is easy to overestimate the influence of imports, I would tag neutral on the economy of Japan.

[Positive] Teg: Saudi Arabia

The economy is expected to benefit this 2018 year from higher oil prices reflecting the success of cuts by OPEC and allies and strong as expected global growth compared to 2017. This additional revenue will help to boost internal consumption which constitute around the half of SA GDP. I would suggest a gradual growth in GDP from 2.2% in 2018 up to 2.5% in 2021. Also, the government announced privatization of Saudi Aramco and some others assets, this should attract more foreign investors to Saudi Arabia. If it happens it would be the greatest oil stock IPO with the total value of more than 1.5 trillions of dolor (I am measuring by Price-to-Reserves multiple). How many shares the Government would offer we do not know but it is rationale around 5%-10% in IPO, which would result in 75-150 billion of dollars. This is a good sign for investors and opportunities that Saudi Arabia offers if they would not postpone privatization as it was...

[Neutral] Teg: Canada

I expect that Canada will be able to continue its stable growth: IMF's forecast for GDP growth in 2018 is ~2.1%, unemployment rate is at the lowest level since 70s (5.8%). However, despite all these obvious signs of recovery, one should note some concerns: 1) NAFTA renegotiation. USA is very important market for Canada (2/3 of export) and, thus, NAFTA is very important agreement for Canada (that makes Canadian products competitive on US market). However, now the future of NAFTA is questionable. Moreover, taking into account Trump's protectionist policy, I consider the case for USA to withdraw from a treaty as rather probable. 2) Household debt. According to OECD, households in Canada have the highest debt-to-income ratio (> 100%) in the developed world. Coupled with the lowest unemployment rate, I consider these as a fundamental internal constraints for Canada's long-term growth. 3) US tax reform. On the one hand, this reform is likely to support US GDP growth and, consequently, Canada's GDP growth (as Canadian economy is heavily reliant on US economy). However, on the other hand, lower corporate tax was one of the Canada's competitive advantages (comparing with USA), and, consequently, this reform is likely to decrease foreign direct investments. 4) Higher US Fed interest rate. It is likely that US Fed will increase interest rate. And the net result for Canada is rather questionable. On the one hand, that will likely lead to Canadian dollar weakening and, thus, Canadian export support. On the other hand, US dollar strengthening will lead to world economy slowing down.

[Positive] Teg: China

I expect that China's economy growth will be more moderate in coming years (6 - 6.5%), however, that will mainly caused by Government's plan of 'high-quality development': reducing of imbalances in economy, reducing pollution, stabilization of financing sector. As a result, it is expected (1) further decline in investment due to capacity cuts and stricter pollution controls, (2) tighter credit conditions that will lead to demand decreasing. In the same time, government is likely to support the growth by fiscal stimulus (through SOE and infrastructure projects). I assume that long-term results could be mostly positive for China economy (despite lower growth in near-term). However, there are some challenges for Government in near and long-term perspective: 1) Possible trade war with USA (that could cost for China 1-2% of GDP growth). 2) Demographic: rapidly aging population, declining labor force (one of the key issue announced by The Chinese Academy of Social Sciences, a leading government think tank). 3) Unemployment growth, particularly, due to planned reducing of imbalances in economy and capacity cuts. Coupled with rising living cost, this problem might create a social instability in China. 4) Local governments debts. Despite China conducts tighter monetary policy to stabilize its financing sector, the real situation with local governments debts is opaque (due to local government financing vehicles, public-private partnerships and possible faking reporting data)

[Negative] Teg: Italy

I think that domestic demand growth in Italy and positive outlook for the euro zone economy will be completely offset by political instability in the country. Political uncertainty has increased the potential for financial volatility and could harm the current moderate economic recovery, as well as further postpone of structural reforms at least in the short term. In spite of the possible support by the EU, Italy's high public debt and political instability will continue to give rise to concern for the major euro zone creditor countries, as well as put pressure on stability in the EU and financial sector.

[Positive] Teg: Argentina

Most sources say that the economy of Argentine is expected to accelerate in 2018 and 2019 on the grounds of the increase of consumption and investments in fixed assets. I remember that they want to raise infrastructure's investments by 20% this year. It is very nice and promising for businesses which engaged in mineral resource extraction, agricultural and chemical sector, well would be done and for the others in total. In such scenario GDP would expand minimum by 3% this year and by 4% in 2019. It is also worth to note (on my opinion this is important) that the government announce to cut the spending's on state apparatus. Nonetheless, this in total is ideal picture. To be skeptical for GDP, I guess adequate rates for 2018 and 2019 are 2% and 2.5%

[Neutral] Teg: Canada

Economic growth rate I expect to slow in the next two years as household consumption and government spending slows. Recent developments in consumption has not been transferred to the increase in wages and I think that house prices will continues to slow, no considerable job growth (if any at all). They also did not announced any substantial government investments. Thus, I project the growth of Canadian economy to ease

[Positive] Teg: India

In most analysts report the outlook for India is largely positive notwithstanding the fact of its slowdown in 2017. Such a growth 7.3%-7.5% for the next two years 2018-2019 adds economy of India as a fastest growing emerging market in Asia and in the world. I would quote factors from UN report: positive forecast is supported by robust private consumption and public investment as well as ongoing structural reforms. Indian government plans to improve Goods and Service Tax as well as Bankruptcy Code which will lead to more efficient trend of growth in Long-run. Once the government of India continues to carry out structural reforms, prudent macro policies and redistribute towards infrastructural project - we may really bet a lot into India's outlook - merely 8% per year in GDP terms.

[Negative] Teg: Brazil

Despite recent stabilization in Brazilian economy after recession in 2015-2016, I assume that this recovery will be short-lived. The thing is, budget deficit remains high and its reduction might lead to both growth lowering (due to reduction of government spending) and social instability (due to unpopular measures such as raise the retirement age). As a result, political crisis is quite possible and, if so, that will lead to second wave of recession

[Positive] Teg: France

France's recovery from its economic downfall in 2012 has been slow in comparison with the most of its European peers. However, according to the results of 2017 (GDP growth = 1.9%) the economic growth has showed the strongest growth since 2011. Taking into account the continued cyclical upturn in the euro zone and increasing of domestic demand, I expect annual growth to average 1.7% in 2019-2022. Also the main challenges for Macron's policy are to reduce the high rate of unemployment (especially among young people), increase competitive advantage, promote the economic growth, improve foreign investors' views about the French labor market, as well as develop the public finances. I believe in Macron's ability to achieve these goals, therefore I expect the reforms will start to gain traction towards the end of 2022.

[Positive] Teg: Brazil

I expect that Brazil's economy will continue to recover from downfall in 2015-2016, as well as weak growth in 2017, and will show annual average real GDP growth at 2.6% in 2018-2022. Lower inflation and interest rates are supporting the growth of private consumption, given by stimulating retail sales and improving household and company balance sheets. However, the credit growth is weak, due to the banks haven't adapted to the sharp decline in the policy rate. In my view, by implementing fiscal reforms and pursuing a sensible policy, the next government could increase the investment, after falling by 25% in 2015-2016, and provide stable economic growth in 2018-2022. Therefore I have positive outlook for Brazil's economy.