Global Economy To Grow At Pre-crisis Rate in 2018

By: DailyForex.com

The global economy has returned to a growth rate close to its long-term (1961 to 2016) average value of 3.52% with projected global growth of 3.1%. The figure is regarded (in certain quarters anyway) as towards the maximum global output with many developed economies working near their maximum output levels (this needs to be taken with a healthy pinch of salt as it would suggest strong wage inflation is present in developed economies which has yet to manifest itself).

The World Bank expects growth to peak in 2018 at 3.1% before easing slightly next year. In its view, 2018 will be the first year since the Global Financial Crisis that the global economy is running at “full potential”. The forecast was upgraded from June 2017’s prediction on the basis of stronger economic performance than anticipated last year. The Eurozone outperformed World Bank expectations in 2017, contributing to the upwards revision. The World Bank is anticipating that the Eurozone will grow more slowly in 2018, but at a better rate than it thought would be the case in its June forecast.

The World Bank’s crystal ball is positively gloomy in the longer term. Amongst other things, it suggests that living standard gains and poverty reduction being seen now will be at risk over the longer term. Its concerns stem from the question of if the global economy can maintain “decent” growth in the longer term as potential is growing more slowly than it has historically as a consequence of weakened investment and an aging global workforce. These factors are significant in nations representing two thirds of global output, it concludes. If one accepts that global output is close to its peak value, then the traditional levers for stimulating growth for goods and services via governmental spending and fiscal policies is limited.

On a slightly more upbeat note, the Bank thinks that emerging and developing economies will grow more rapidly than anticipated in 2018.

According to the CIA, global GDP is about $78 trillion. The global population is approximately 7 billion and there is a vast range of income inequality within countries and regions in emerging, developing and developed countries, of course.

Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.