The evolution of employment and real wages, which have slowed down in annual terms in the last year, implies slower growth in the wage mass. This, coupled with still low household expectations, is consistent with positive, yet moderate, growth in consumption (figure 6). 2  BIS central bankers’ speeches  Turning to the world economy, as I said, international financial markets have been marked by two situations. One, the US monetary policy normalization process, and two, the Chinese policy makers’ efforts to achieve their growth and financial stability objectives. Early in the quarter the market assumed that the Fed would take things extremely gradually and that the Chinese authorities had figured out the policy mix that would allow them to keep growth in line with its objectives. Thus, the calm of financial markets that had begun at the close of the last Report was prolonged. Capital flows returned to the emerging world, stock markets recovered, interest rates dropped and so did spreads, the dollar weakened and commodity prices improved. Nonetheless, the increasing doubts about the Chinese financial system and the perception that the US monetary policy will soon implement its adjustments – a still uncertain development – have tended to reverse these trajectories in recent weeks. This has been particularly visible in the depreciation of emerging currencies (figure 7).
Consistently with the volatility we have been seeing and the risks inherent to the international economy, our baseline scenario assumes that in the coming quarters international financial conditions will be, on average, less favorable than they were in the past two months. Our growth outlook for the world economy and our trading partners changes little from March: 3.2 and 3.0 percent, respectively, for the 2016–2017 average. Still, there is a significant revision to expected US growth: 1.9 percent in 2016 (2.3 percent in March). This estimate inputs the low output figure of the first quarter, which has to do both with the drop in energy investment and the weak external sector. In any case, aside from one-time data, services and labor indicators show a recovering trend and the baseline scenario foresees the economy resuming higher growth in 2017. It also estimates that the Chinese economy will be able to carry on with its adjustment process without seriously compromising its growth rates. But this process will not be free of difficulties. The terms of trade will drop again in 2016, although not as sharply as we assumed in the last Report, owing mainly to the evolution of non-copper export prices. Considering its trajectory of the past few months, the baseline scenario assumes that the copper price will average $ and $ per pound in 2016 and 2017, respectively. For oil, our forecast for the same two years is raised to $ and $ per barrel the Brent-WTI average (table 2).