Dollar to stay lofty, but another leg up is unlikely

The rising dollar was the other headwind to growth over the past year. The greenback's ascent did not begin in 2015, but it continued at full steam. From the start of the year to December, it rose 9%, the same rate of increase as 2014. This, combined with a slowdown in global economic growth, hit exporters. 

Foreign GDP growth in 2015 fell to its slowest pace since 2008 and, unsurprisingly, exports virtually stalled. Imports, on the other hand continued to advance, supported by the increased purchasing power of the dollar and the strength in domestic spending. Consequently, net exports shaved 0.6 percentage points from growth in 2015. 

The highflying greenback will continue to bite into exports over the course of 2016. But, the potential for another leg-up looks limited given that financial markets have largely priced in policy divergence with the U.S. relative to its peers. In addition, the global differential in economic growth is likely to diminish. Emerging markets will continue to be challenged, but the process of adjustment, especially for commodity exporters, is already well on its way.