Global Economic Forecasts: Q3 2017

Global Economy OVERVIEW

The global economy has started 2017 strong with real GDP growth gaining momentum and rising to 3.6% in 2017 Q1. We have maintained our global real GDP growth forecast at 3.5% for 2017-2018.

Despite standing above the annual 3.2% growth in 2016, the forecast is still considerably below the pre-crisis growth levels. The economic activity is forecast to accelerate in both advanced and emerging economies, reaching 2.0% and 4.7% growth, respectively, in 2017.

Emerging markets growth

Emerging markets however, will remain a principal driver of the global economic growth, accounting for as much as 74% of the world’s real GDP expansion. This share is predicted to surge further up to 79% in 2020. The uncertainty surrounding the global growth forecast has somewhat receded since May 2017.

Political Risks

The political risks have diminished in Europe, with the region rebounding more strongly than expected.The populist parties have performed worse than expected in a number of Eurozone elections, which suggests that the populist surge might begin to fade.

Unexpected US policies

Some of the most urgent global risks presently are stemming from the unexpected US policies, rising geopolitical tensions, uncertain outcome of Brexit negotiations, or the possibility of sharper than estimated China growth slowdown.

These changes could complicate the macroeconomic situation in major economies with negative spill-overs to other countries and result in damage to their private confidence,investments and overall economic growth.