Who will be picking up the medals in the economic Olympics?

As British athletes make the journey to the host nation, Brazil, the UK economy should be making further strides in its recovery with inflation once again entering the system.

Wage growth, which had remained subdued over the last couple of years, picked up at the end of 2015 as the factors that had previously held wage growth back started to disperse. Coupled with this, the year on year comparison impact of low oil prices is coming to an end and this could well result in inflation creeping up faster than we had originally expected, although current forecasts expect no change until 2017.

In this environment, value-based investments could outperform their growth orientated peers and UK investments which are sensitive to movements in interest rates will also be in our 2016 starting line-up.

China has historically achieved success at the Olympics with some fine sporting achievements. Whether the same can be said of China’s economy as we move forward is debatable.

A slump in Chinese factory activity in December reignited fears over the strength of the giant economy, sending stock markets around the world lower on the first full day of trading in 2016.

We believe that, whilst Chinese athletes may well continue to dominate some Olympic events, the slowdown in China’s economy and the volatility of its stock market will continue to irk investors.

Another traditionally strong Olympic contender is USA. Its politicians made headlines by raising interest rates for the first time in nine years in December. Though some fear that a rate reversal could be a possibility in 2016, with the American economy performing strongly, the Fed was left with little choice.

America is now leading the global interest rate hiking cycle and, whilst others will likely follow, short-term divergence in global monetary policies could increase stock market volatility.

Against this backdrop, American consumer companies have the potential to benefit, though we believe exposure to America through the US dollar will be a medal winner this year.

Europe’s collective sporting prowess is not so well recognised, but its economy could well triumph in 2016. Loose monetary policy, combined with a less rigorous fiscal policy and a weak euro, has paved the way for European consumers to keep spending thereby boosting eurozone growth.

The value of investments and income from them may go down as well as up and investors may not get back the amounts originally invested. Investors should refer to their financial adviser to ensure that our service is suitable for their investment needs.