'Ouch': The global economy is having a painful start to 2018

• Global developed economy growth slowed sharply at the start of 2018, according to UBS.
• The Swiss bank's economic modeling suggests that growth slowed by 0.7% between the fourth quarter of 2017 and the first quarter of 2018.
• If the USA is excluded from that modelling, the fall is 1%.

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"Ouch."

That's the verdict of Swiss banking giant UBS on the global economy right now.

Data suggests a sharp slowdown in growth following several years of rapid expansion. A UBS team led by Arend Kapteyn said in a note on Friday that things are set to get worse.

The bank's "hard data growth tracker" - which records data points from major economies around the world - illustrates just how acute this slowdown is set to be.

"Now get this: Q1 GDP is tracking at only 1.6% for DM as a whole based on the hard data (down from 3.1% in Q4 so a 150bp slowdown), and we see similar slowdowns in the 'soft data' model (-70bp) and the full combined model (-100bp)," the team wrote.

In short, global growth effectively halved in just one quarter, and things look even worse if you strip out the continuing strength of the USA's economy.

Without the US data, Kapteyn and his team said, "DM growth is tracking at only 1% in Q1 down from 2.7% in Q4."

Both these figures, it should be said, reflect expectations for the first quarter against UBS' expectations for the final quarter of last year, and in both instances, UBS actually overestimated fourth-quarter growth, meaning that in reality, the global economy is set to slow only around 0.7% - but this is still a large figure. When US growth is removed, the slowdown is 1%.

Still, UBS cautions that these are all just estimates and it could be out. But the general trajectory doesn't look good.

One of the big drivers of slowing growth has been the eurozone, which is feeling the effects of problems in the previously rampant German economy.

"A good chunk of that weakness is the Eurozone where 7% of the German labour force was out sick (flu) and severe weather disruptions have dragged on the data," UBS said.