Growth still soft, but not collapsing

Available data suggest that world GDP growth was stable at around 3% annualised in Q3, which is below the ten-year average of 3.5% but stronger than the 2.5% pace recorded in the second half of last year. Growth looks to have accelerated in emerging economies, mainly thanks to a policy-driven rebound in India. But there appears to have been a slowdown in the developed world, with the US and the euro-zone both probably posting slightly slower growth than in Q2. There are some signs that industrial production and exports, which have been the weakest parts of the global economy in recent months, may be bottoming out. But at the same time, the latest surveys of hiring intentions have implied that labour markets will weaken further. This, together with sharp price increases in China, will weigh on real incomes and household spending growth, keeping the global economy growing at a subdued rate for a while yet.