World Economic Prospects Monthly

Abstract

Economic OutlookVolume 41, Issue s9 p. 1-29 Article World Economic Prospects Monthly First published: 20 September 2017 https://doi.org/10.1111/1468-0319.12299AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Abstract Overview: Momentum extends into Q3 ▀ Further Q2 growth surprises in several economies have prompted us to raise our world GDP growth forecast for 2017 again, to 2.9% from 2.8% last month and 2.6% at the start of the year. Our 2018 forecast is unchanged at 3.0%. ▀ Our Q2 estimate for quarterly world growth of 0.9% would be the strongest result since the post-global financial crisis rebound in 2010. Although China has been a key contributor to the strength in H1, there has also been another engine of growth in the form of solid domestic demand in the advanced economies. ▀ August's rise in the global composite PMI to its highest level in two and a half years provides some hope that the global recovery will continue and is becoming more self-sustaining. The summer rise in the global manufacturing PMI points to a renewed pick-up in world trade growth after the Q2 lull. In addition, the advanced economies' services PMI has also strengthened and labour market recoveries are continuing, a sign that the recent strength of domestic demand will persist. ▀ For now, our baseline view remains that there may be some payback in Q3 for the exceptional strength of GDP growth in Q2. But the strong surveys imply that the risks to our forecast may lie to the upside. ▀ We do not expect the further strength of the euro to put a major dent in the Eurozone recovery. But we have downgraded our 2018 CPI inflation forecast further in response. This should ensure that the ECB takes a ‘steady as she goes’ approach to policy normalisation. Similarly, with inflation pressures in the US still fairly muted, we also expect a slow pace of tightening there, with no further interest rate hikes by the Fed this year and just two in 2018. ▀ Among emerging markets, we have made large upward revisions to GDP growth in Poland and the Czech Republic, suggesting that the effects of the strengthening Eurozone recovery are spreading east. But on the downside, we expect this year's slowdown in India to be larger than previously assumed. Volume41, Issues9September 2017Pages 1-29 RelatedInformation