The top market analysts at Goldman Sachs have started to release their economic forecasts for 2016, highlighting how they think the markets will perform over the coming year.
Experts such as Charles Himmelberg have stated: “Growth has consistently disappointed over the past several years, but this has not prevented risky assets from increasing substantially. In 2016, we expect activity to continue to expand in the advanced economies, led mostly by the consumer.” Source: http://www.businessinsider.com/goldman-top-ten-themes-for-2016-2015-11
In addition to these generalised statements, Goldman Sachs have also released the following graphic which outlines their GDP forecasts for the world’s leading economies in 2016:
As we can see, the world’s largest emerging markets such as India and Indonesia look set for a promising 2016, although growth does appear to have slowed somewhat in China.
This means that India’s CNX Nifty and CNS 500 indices may well be worth keeping an eye on. Conversely, The Shanghai Composite (SHCOMP:IND) may see a disappointing performance, perhaps due to a lack of investor confidence after this year’s Chinese stock market turmoil.
The United Kingdom and the Eurozone as a whole are expected to see very modest growth, although still considerably below the global average of 3.2% growth.
The UK’s FTSE 100 is always a strong index to watch out for, but one has to wonder if the EURO STOXX 50, which represents the 50 biggest blue chip companies in the Eurozone, will fare well over the next 12 months.
Russia looks set to make a strong recovery in its GDP growth throughout 2016; however, it is worth raising the question of whether or not this may be affected by diminishing investor confidence as the Kremlin increases its involvement in Syria and the Middle East.
Nevertheless, the MICEX and RTS Index are definitely hot stock indices, with Russian GDP growth looking set to take a significant U-turn from its 2015 decline.
Overall, the global economy appears to be set for modest growth across the board, with no countries other than Russia being predicted by Goldman Sachs to make any significant moves in 2016.
If there is one stock index that is probably best avoided in light of these forecasts, it is Brazil’s Ibovespa. Brazil looks to be the only major economy that will remain in negative GDP growth over the next year, so this could spell trouble for its stock market and economy as a whole.
Aside from all of this, Goldman Sachs issued its top trade recommendation for 2016 as being to bet on the US dollar while shorting the euro and the yen. It will certainly be interesting to see how accurate their predictions are, especially regarding the US dollar and a reversal of Russia’s declining GDP.
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