Global Economic Forecasts: Q2 2018
Strategy Briefing
About This Report
May 2018Global economy continues to perform strongly, both in advanced and emerging markets. Global real GDP expanded by 4.0% in Q4 2017. Growth was supported by higher investment activity in advanced economies, higher consumer demand in emerging markets, and a rebound in global trade. We expect global GDP to grow by 3.8-3.9% per year over 2018-2019, albeit with a gradual easing on the cards as central banks tighten monetary policy, US fiscal stimulus subsides, and China’s slowdown progresses.
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Global Economic Forecasts: Q2 2018
Global economic activity continues to perform strongly, both in advanced and emerging market economies
Global real GDP expanded by 4.0% in Q4 2017, which was notably above our baseline forecasts a year ago. Growth was supported by higher investment activity in advanced economies, higher consumer demand in emerging markets, and a rebound in global trade.
In the May 2018 baseline we forecast global real GDP to grow by 3.8-3.9% per year over 2018-2019, albeit with a gradual easing on the cards
As central banks tighten monetary policy, US fiscal stimulus subsides, and China’s slowdown progresses. Despite positive near-term economic prospects for the world, debt levels, financial market volatility, trade and geopolitical tensions pose a threat.
Our newly-introduced Global Downturn scenario captures hypothetical effects of the above downside risks
The scenario assumes escalating fears about trade wars and more populist policies, as well as concerns about overvaluation in financial markets, which could lead to a self-fulfilling sell-off in advanced economies, and through global spill-overs induce a slowdown in emerging markets. If materialised, these risks have the power to reduce global GDP growth by a cumulative 5.4% over the 3-year horizon.
Overview
Global Economy
Executive Summary
GDP Growth Forecasts – Revisions Over Last Quarter
Inflation Forecasts – Revisions Over Last Quarter
Interest Rate Forecast
Major Forecast Revisions
The US
General Outlook
Pessimistic and Optimistic Scenario
Private Sector Sentiment and Financial Markets
Monetary Policy and Credit Conditions
Aggregate Demand
The Eurozone
General Outlook
Pessimistic and Optimistic Scenarios
Private Sector Sentiment
Monetary Policy and Credit Conditions
Aggregate Demand
The UK
Economic Outlook and Brexit
Pessimistic and Optimistic Scenario
Labour and Private Sentiment
Inflation and Monetary Policy
Japan
Economic Activity
Pessimistic and Optimistic Scenario
Foreign Trade
China
General Outlook
Pessimistic and Optimistic Scenario
Global Risks
Aggregate Demand
Financial Conditions
Russia
GDP Growth
Pessimistic and Optimistic Scenario
Production and Wages
Inflation and Income
Brazil
Economic Activity
Pessimistic and Optimistic Scenario
Fiscal Accounts and Presidential Election
Foreign Trade
India
GDP and Components
Pessimistic and Optimistic Scenario
Industrial Production and Business Sentiment
Inflation and Monetary Policy
Risk Scenarios
Global Risk Scenarios
Scenario Descriptions
Scenario News
notes
Scope and Objectives
Definitions
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