Posts Tagged ‘Macroeconomy’


National Institute of Economic and Social Research (NIESR) launched its latest economic review at the organization’s quarterly press conference yesterday in Westminster, London.

According to NIESR’s review of UK economy, GDP is to grow by 1.7 per cent in 2016 and drop to 1 per cent in 2017 and will continue to deteriorate in the third and fourth quarter. Inflation  is to increase and peak at 3 percent at the end of 2017.

UK will barrow additional £47 billion within the next five years, the forecast predicted.

Simon Kirby, Head of Macroeconomic Modelling and Forecasting at NIESR, who presented UK economy at the conference explained that :“We expect the UK to experience a marked economic slowdown in the second half of this year and throughout 2017. There is an evens chance of a ‘technical’ recession in the next 18 months, while there is an elevated risk of further deterioration in the near term. In light of the downturn underway and the downside risks to the outlook, a decision by the MPC to provide monetary stimulus would be welcome and we look forward to assessing the new Chancellor’s plans at the Autumn Statement.”

recession after brexit

NISER expects the unemployment rate to rise  from 4.8 per cent in the second quarter of  2016  to a peak of around 5,75 per cent in the middle of 2017.The organization estimates that the economy will shrink in 2016Q3 and lead to a recession at some point during the period 2016Q3 to 2017Q4, inclusive.

Dr Angus Armstrong, Director of Macroeconomics at NIESR, presented the organization’s  forecast of the world economy following Simon Kirby. According to the forecast the world economy is expected to grow by 3.0 per cent in 2016 and peak at 3.5 percent in 2017.  Inflation is likely to be below target in the OECD economies in 2017. The European Central Bank (ECB) stands ready to ease monetary conditions while the Federal Reserve is likely to raise interest rates gradually.

“Re-joining EFTA (European Free Trade Association) is consistent with the notion of ‘taking back control’. This will result in less economic integration with the EU and so lower productivity and output over the medium term. The critical issue is whether the UK can strike deep trade deals with our trading partners elsewhere.  This could be  joining the Trans Pacific Partnership or the Transatlantic Trade and Investment Partnership. At this stage both face significant challenges due to lack of popular support,” said Dr Armstrong at the press conference.

Forecast shows that Brazil, Japan and Russia economies are to grow . India is likely to remain the fastest growing major economy. The US is expected to grow by 2.3 per cent in 2017, with the Fed likely to raise interest rates only very gradually. Inflation is expected to be slightly lower .OECD average inflation will remain well below central banks’ targets through to 2018. The exception is the UK where a short-term rise reflecting the depreciation of sterling is expected, NIESR’s forecast indicated.