In 2015 and the beginning of 2016, the global economy took downward path. Sharp decline in oil prices had pulled the US economy down and put it on edge of a new recession. 

Investment in oil collapsed in the nation, while banks began tightening credit standards and high yield spreads blew out, noted Danske Bank in a research report.

But it appears that the US economy has faced its worse and is likely to see a gradual rebound from below 1 percent growth in the first quarter to 2 percent-2.5 percent growth from Q2 to Q4 this year, according to Danske Bank. Lately, oil prices have increased to about USD 50 per barrel from below USD 30 per barrel. Furthermore, energy investments are unlikely to decline further after a sharp decline in 2015.

Meanwhile, growth in consumption has been quite decent in the US and has kept the economy from falling into recession. Labor market’s recent weakness has been considered as a rising recession risk. However, it appears to be more of an impact of the past deceleration of the US economy and not a projection of where the economy is headed, added Danske Bank. A strong consumer spending and housing data is expected to help the US economy accelerate in the rest of 2016 as the drag from energy diminishes.

Last year, the global economy faced a major headwind from the hard landing in China’s industry and construction sector. The construction sector was heavily weighed on by huge oversupply of houses and at the same time, suffered a major blow to global commodity markets that impacted emerging markets commodity exporters.

However, inventory to sales levels in housing have moved to normal levels in 2016, while home sales have remained strong. This has created a path for a rebound in China’s construction growth. This, along with a stimulus to infrastructure, is boosting the overall economy. Meanwhile, debt levels continue to rise and are increasing worries regarding a financial crisis at certain point in the future, according to Danske Bank.

Meanwhile, growth in the euro area has remained at about cruising speed at 1 percent - 2 percent. Confidence was slightly impacted after the emerging market turmoil in January and is currently being impacted by the risk of Brexit.

“We look for some improvement in H2 as the Brexit risk fades if UK votes to remain in the EU as we expect,” said Danske Bank.

Even as the risk of Brexit diminishes in the second half of 2016, uncertainty regarding the US presidential election might become a major concern for the global economy. Therefore, uncertainties are expected to continue keeping a dent on global growth, noted Dankse Bank.