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World Economic Prospects Monthly
Publication year - 2017
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/1468-0319.12284
Subject(s) - economics , real gross domestic product , brexit , international economics , inflation (cosmology) , monetary economics , economic policy , international trade , european union , physics , theoretical physics
Overview: Increasingly robust growth▀ Our world GDP growth forecast of 2.7% for 2017 (compared to 2.3% growth in 2016) continues to reflect the strengthening in global trade currently taking place in several regions. This has led us to upgrade our trade forecasts for a second consecutive month, from a previous 5% to 5.4%. ▀ Global indicators continue to point to strong economic activity, with the composite PMI index close to its highest level in two years in May. ▀ Previously ebullient soft data in the US has cooled as expectations of a major tax reform and infrastructure program have ebbed. We see growth accelerating in 2018 owing to a modest fiscal boost, but risks are tilted to the downside as Congress' agenda is extremely busy. We see the Fed proceeding with further gradual rate hikes and balance sheet normalization this year, but a more gradual approach may be warranted if inflation continues to soften. ▀ In the UK, the general election on 8 June resulted in a hung parliament, with the Conservatives the largest party but lacking a majority. While political uncertainty may weigh on activity, the possibility of a more growth‐friendly fiscal policy and a softer Brexit could represent upsides. ▀ GDP revisions in several countries meant the Eurozone expanded a robust 0.6% in Q1, while leading indicators suggest continued strength in Q2. A stronger outlook for exports and investment coupled with improved sentiment has led us to upgrade our Eurozone GDP forecast again to an above‐consensus 2% for this year. Elsewhere in Europe, we have also upgraded our forecasts for the CEE economies significantly as economic activity continues to benefit from stronger growth in the continent. ▀ Emerging markets continue to benefit from a global upturn in trade and industry, at the heart of which is a China‐commodity nexus. We find that this link will continue to support world growth in the near term, but the global upturn is vulnerable to moderating Chinese growth and to a slippage in commodity prices.