The world in a nutshell BY Goldman Sachs

The ECB’s QE Prescription, and Its Side Effects       MACRO AREE OUTLOOK KEY ISSUES UNITED STATES We forecast real GDP growth of 2.8% in 2015 and 2016. On a sequential and annualised basis, we expect growth to pick up to around 3.1% in 2015Q2, and then move to around 3.0% in subsequent quarters. The shift to sustained above-trend growth in the US that took place in 2014 is likely to be maintained in 2015, and it remains the strongest anchor of the global recovery. Positive impulses from personal consumption and residential investment should add significantly to growth in 2015 and beyond. JAPAN We forecast real GDP growth of 0.6% in 2015 and 1.2% in 2016. On a sequential basis, we expect growth to be between 1% and 2% for most of the year. Sequential growth returned to positive territory in the last quarter of 2014 after a technical recession in the middle of 2014 following the consumption tax hike. Following the recent second consecutive negative GDP print, the authorities announced changes to stimulate the economy, including pushing back the consumption tax hike. The new BoJ leadership has led to a regime shift in Japanese monetary policy, with much more aggressive, Fed-style easing capabilities. While this potentially offers a way out of more than a decade of deflation, reaching the 2% inflation target remains a tall order. EUROPE For the Euro area as a whole, we forecast growth of 1.5%  in 2015 and 1.7% in 2016. The growth outlook at the country level still shows divergent trajectories, with  growth below 1% in Italy, but somewhat above that  threshold in Germany and Spain.   We forecast Euro area growth to move higher, driven by modest improvements across all major components of domestic demand. Support from monetary policy will also contribute to that recovery. Still, the list of necessary adjustments in the periphery remains long, ranging from cleaning up the banking system and labour market reform to increasing competitiveness. NON-JAPAN ASIA For Asia ex-Japan, we forecast growth of 6.3% in 2015 and 6.5% in 2016. We expect the economies in the region to benefit from the stronger DM recovery in 2015. In China, we forecast real GDP growth of 6.8% in 2015 and 6.7% in 2016. CENTRAL & EASTERN EUROPE, MIDDLE EAST AND AFRICA With growth across the region forecast at 1.1% in 2015 and 3.1% in 2016, we expect CEEMEA to continue to recover slowly. Helped by improvements in external demand conditions, largely negative output gaps have led to a recovery from the 2012 soft patch, although current account deficits and the geopolitical context are likely to pose challenges. The EM differentiation theme is again visible across the region. We forecast solid growth in Poland, while growth in Russia and Ukraine are forecast to be negative in 2015. LATIN AMERICA We forecast that real GDP growth in Latin America will be 0.3% in 2015 and 2.3% in 2016. Against a more favourable global backdrop, the divergence between those economies with more challenging (Brazil) and more stable (Mexico) policy outlooks is likely to increase. In Brazil, we forecast real GDP growth of -1.1% in 2015 and 1.3% in 2016. For Mexico we expect 2.9% and 3.5%, respectively. Despite sub-par growth, inflation in Brazil remains above the 4.5% target.