Underlying Economic Conditions
Economists expect the global upswing to continue in 2018 with increasing momentum. But there are still significant risks to growth over the medium term. An unexpected slowdown in China could dampen the world economy, as could tighter monetary policies by leading central banks. Another growth hurdle is the low inflation rates seen in numerous countries. In addition, the global economy faces significant risks from geopolitical crises in the Middle East, Eastern Europe and Asia, and from continued political uncertainty in Europe and the USA.
According to the International Monetary Fund, global growth will be somewhat stronger in 2018 than last year. The IMF expects world GDP to expand by 3.9 percent (2017: 3.7 percent). In the Fund’s estimation, emerging markets will make the biggest contribution in 2018, with 4.9 percent growth. Advanced economies will grow by 2.3 percent. In China, government initiatives to raise the service sector’s importance are gaining traction. But the fact that China’s growth rates are still high is a sign that economic restructuring is not progressing as fast as planned. Basically, experts agree that the pace of expansion in China, and in Asia’s emerging economies, will continue to decrease in the years ahead – even if growth rates remain high on balance. The eurozone seems on track for further growth. GDP in the USA is also expected to climb in 2018.
Given the latest economic projections, our 2018 scenario is for the world economy to expand noticeably. For 2019, we anticipate similar growth.