Societe Generale Economic and Sectoral Studies Department - June 2015: More Volatility


The year began with the impression that the divergences in growth regimes, between the United States and the rest of the world, as well as in monetary policies were set to last.

Doubts have emerged on all these factors over the last three months causing a correction in bond markets and a curb on the dollar’s appreciation against all currencies. That said, US growth seems to be strengthening even though downside risks remain. Eurozone growth is
expected to gradually accelerate but is likely to remain subject to uncertainties, such as a
deepening of the Greek crisis. Emerging countries look set to continue on their trend towards
a gradual slowdown even though bad news from China cannot be ruled out. In this
environment, the conduit of monetary policies is likely to become complicated. The keyword
for the coming months is therefore likely to be volatility.

The highlights for the Asia Pacific area:

Japan: Ephemeral Inflation

Economic activity is expected to moderately expand by 0.9% in 2015and1.3%in2016.
Inflation is likely to remain low at around 1%,leading the Bank of Japan (BoJ) to postpone from April 2016 to April 2017, its objective of bringing inflation to 2%.

China: Policy Easing Starts to Work

Real GDP is projected to gradually slow to 6.8% and 6.6% in 2015 and 2016. The policy
stimulus undertaken since end-2014 has started to have some positive impact. It would help
the authorities to achieve the “new normal” with lower and better growth.

India: Priority is Given to Growth

After two years devoted to reducing macroeconomic vulnerabilities, monetary policy, which
has been accommodative since the beginning of the year, is expected to underpin the gradual
recovery of economic activity.

To read the full Scenario Eco report of June 2015, please visit: www.societegenerale.com