In recent months, after a termporary slowdown in the first quarter of 2014, the U.S. economy has recovered, while growth in the Euro area is still weak. Our forecast envisages a further depreciation of the euro/dollar exchange rate both in 2014 and 2015 fostered by the U.S. restrictive monetary policy. In 2014, world trade is expected to expand by 3 percent in real terms, increasing to 4.4 and 4.8 percent in 2015 and 2016 respectively. World economic growth is worse than forecast in May, thus influencing the projection of oil price which was significantly revised downwards (from 112 to 97.8 dollar per barrel). Brent crude oil price is assumed to remain below 100 dollar per barrel in 2014-16.
In 2014, GDP is expected to decrease by 0.3 percent, expanding by 0.5 percent in 2015 and growing by 1.0 percent in 2016, in real terms. The recovery will be mainly driven by domestic demand.
In 2014, the fall indomestic demand (net of inventories) will account for 0.3 percentage points of GDP growth decline, while foreign demand will support growth by 0.1 percentage points. In 2015, domestic demand is expected to support GDP expansion (+0.5 percentage points) while foreign demand will account for an increase of 0.1 percentage points. In 2016, domestic demand will be the main driver of GDP growth.