Global economic environment
Politics
Politics played a growing role as the year advanced. Notable events included the formation of a minority government in Spain after a second general election, the United Kingdom's vote to abandon the European Union, Republican Trump's surprise victory in the US presidential election, and the rejection of the Italian Senate reform by referendum.
Global economic growth
Global growth remained relatively sluggish, with potential growth rates below those seen before the global financial crisis.
Source: Reuters
Inflation
Inflation remained below the target levels set by monetary policy in the major developed economies, although it increased in the final months of the year.
Emerging economies
Emerging economies made progress with deleveraging.
China and Brazil GDP (year-on-year change, %). Source: Bloomberg
- China
- Brazil
United Kingdom
In the United Kingdom, the impact of the referendum on economic activity has been limited to date, and has been focused on construction and, to a lesser extent, manufacturing.
Bank of England
The Bank of England announced a major stimulus package in August to offset the possible adverse effects of Brexit (cuts in the benchmark rate, revival of the asset purchase programme, etc.).
Pound sterling
The pound sterling depreciated sharply against a variety of other currencies as a result of the uncertainty associated first with the holding, and then with the result, of the referendum on whether the United Kingdom should remain in the European Union.
Federal Reserve
The US Federal Reserve increased its benchmark rate in December, to a range of 0.50% to 0.75%, almost one year after the previous rate increase.
US dollar
The dollar appreciated against the euro, supported by growing expectations of rate increases by the Fed.
Bank of Japan
The Bank of Japan announced a significant change in its policy implementation, by setting a long-term target yield for Japanese government debt.
Mexico
Trump's victory in the US resulted in a downgrade of projections for the Mexican economy.
Mexican peso
The Mexican peso depreciated as a result of the uncertainty created by Trump's victory.