The global economy started off with much trepidation in the beginning 2017, as the world saw potential issues that might negatively impact the economy across the board, such as China’s mounting debt, India’s cash cancellation, Brexit, Trump’s plans for the United States’ economy, and more. However, at the turn of the quarter, it appeared that things were picking up for the world economy.
According to a June 2017 journal by the Global Economic Prospects, “as actual growth continues to exceed potential growth, increasing inflation and narrowing output gaps have raised the prospects of less accommodative monetary policy. Advanced economy growth is expected to accelerate to 1.9 percent in 2017, before moderating gradually in 2018-19. As usual, the outlook is predicated only on legislated fiscal and trade policies. The recovery in global trade coincides with strengthening investment, which is more import-intensive than other components of aggregate demand.”
Fitch Ratings’ chief economist, Brian Coulton had also projected that 2017 would see the fastest world growth, at 2.9 per cent, since 2010. He indicated that the growth was reflective of a “synchronised improvement across both advanced and emerging market economies”.
These predictions were not that far off as overall, 2017 saw a rising stability across the global economy platform, especially with the trade sector’s recovery and progression. The positive direction that the economy took last year resulted in the bullish revision of the Organisation for Economic Co-operation and Development (OECD) prediction for world economic growth in 2017 by 3.6 per cent, and 2018 by 3.7 per cent.
Overall, the United States still holds the largest chunk of the world economy based on its gross domestic product (GDP), with an almost 25 per cent share, valued at $18 trillion, followed by China at $11 trillion and Japan at $4.4 trillion.
Despite trailing behind the United States by $7 trillion, China is poised to be gunning for lead position as it saw an economic growth of 6.7 per cent in 2016, which is significantly higher than the United States’ 1.6 per cent. The former has also overtaken India as the fastest growing large economy, outdoing the latter by a 0.1 per cent growth. This takeover was attributed to India’s Narendra Modi’s cash cancellation initiative, which led to a financial turmoil in the country.
Moving forward to 2018, economists are positive that the world economy will see continued growth, especially in advanced and emerging economies. Data sets from China, Japan, Europe and the United States have shown a synchronised global economic recovery, which would aid significantly in lowering trade and currency tensions.
“Moving forward to 2018, economists are positive that the world economy will see continued growth, especially in advanced and emerging economies. Data sets from China, Japan, Europe and the United States have shown a synchronised global economic recovery, which would aid significantly in lowering trade and currency tensions. “
There also appears to be less economic uncertainty in Europe as the United Kingdom and the European Union have come up with some form of agreements pending the official exit of the former in 2019. With this agreement, there is some form of confidence that can be established in the Eurozone that a complete economic crash will not be imminent.