The growth of global GDP will likely pick up in 2015 and 2016 from the pace of the last three years mainly thanks to lower oil prices, the disappearance of special drags on the world economy and ongoing easing of monetary policies.

This is the view of Richard Hoey, BNY Mellon chief economist, who made the comments in his February outlook.

Drags on the economy in recent years that are unlikely to be repeated include the weather-impacted slide in U.S. GDP in the first quarter of 2014 and the Japanese recession in the middle two quarters of 2014 due to the rise in the value-added tax, Hoey said in his note.

Read: Global economic growth to remain fragile: Report

And, he added, in recent weeks there have been monetary policy easing moves from the European Central Bank, the Swiss National Bank, the Bank of Canada, the National Bank of Denmark, Norway’s Norges Bank, the Central Bank of the Republic of Turkey, the Central Reserve Bank of Peru, the Reserve Bank of India and the Central Bank of Egypt, among others.

Recent currency declines in some regions, such as the eurozone and Japan, will also boost export competitiveness and support global growth, Hoey said. “These currency declines have coincided with a sharp drop in oil prices. As a result, they are more likely to have cyclically appropriate anti-deflationary effects than to generate excess inflation.”

Read: IMF trims Canadian growth forecast

Despite tailwinds to economic growth, challenges lurk, too, according to Hoey. One is a shift toward slower growth in China.

Another challenge he sees is a decline in global trade as growth in emerging markets becomes more dependent on domestic demand. Before the financial meltdown, global trade grew faster than GDP, but now the two are growing at about the same pace.

Read: 11 predictions for 2015

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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