The Forward View: Global – August 2017
Global growth heading back toward trend after soft first quarter.
- After a disappointing first quarter, the pace of global upturn picked up in the June quarter as preliminary GDP results for China, the US and the Euro-zone – which collectively account for 45% of the world economy – showed faster growth. A combination of favourable financial conditions, still-stimulatory monetary policy and no head-winds from budget austerity have underpinned the ongoing moderate growth in the big advanced economies. Conditions in the emerging economies have been more mixed with solid growth in China and India whereas Russia and Brazil have experienced tough economic times.
- We expect global growth to rise from 3.2% in 2016 to 3.4% this year and an around-trend 3.5% in 2018. China and India remain the stand-out global performers, accounting for around half of global growth between them, with a promising looking upturn in the Euro-zone and growth of around 2% in the US driving much of the rest of global expansion.
- This month’s chart page stands back from the flow of monthly data to look at longer run trends and projections in population and productivity around the world, two of the key drivers of longer-term economic performance. Population ageing poses particular challenges for China, the US, Japan and the Euro-zone with the working age share of the population set to fall sharply through the next 20 years. Workforce participation rates are already trending down in many parts of the world and these adverse demographic and workforce trends mean that getting good outcomes on productivity is increasingly important in maintaining economic growth over the longer term. In Africa and India, by contrast, growing young populations will deliver a demographic boost to growth as the share of the working age population rises.
For further details, please see the attached document.