Quarterly Forecast for 2016-17

Assumptions on Exogenous Variables

Growth. Rates of the United States and the Euro Area

The outcome of the UK vote to exit from the European Union in June 23, 2016, has reinforced uncertainty about the global outlook for 2016-17 and increased expectations of more easing monetary policy in advanced economies. According the World Economic Outlook Update (WEO Update) released by the International Monetary Fund (IMF) on July 19, 2017, the US economic growth is forecast at 2.2% in 2016 and 2.5% in 2017. However, the real GDP growth rate in the second quarter released recently is only 1.1%, less than half of the market expectation. Taking this into account, even though the US economy growth is being on a steadily upward trend, forecasts for 2016 and 2017 are both marked down by 0.2 percentage points relative to the July 2016 WEO Update by the IMF, to 2 and 2.3%, respectively.

In addition, according to the WOE Update, we assume that the euro area GDP growth are expected to go up by 1.6% in 2016 and 1.4% in 2017. Quarterly, the US and euro area growth rates are shown in Fig. 2.1.

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