Rising dollar will act as a drag on U.S. GDP growth this year
The greenback has surged roughly 5% in the past two weeks alone, sending it up by more than 20% in the past year against a basket of major currencies. That marks one of the fastest yearly gains on record. BMO Capital Mar…
The greenback has surged roughly 5% in the past two weeks alone, sending it up by more than 20% in the past year against a basket of major currencies. That marks one of the fastest yearly gains on record.
BMO Capital Markets notes in a report on Friday:
There is little doubt that the rising dollar will act as a drag on U.S. GDP growth this year, especially blunting exports in a world of so-so growth. Even with the help of lower oil prices, we have actually shaved our growth call for 2015 a tick to 3.0%, with Q1 growth likely to come in below 2%.
We find that the dollar has next to no correlation with real import growth, but does tend to factor in heavily for exports. Overall, net exports are now projected to shave GDP by 0.5 percentage points this year and by 0.6% in 2016.
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