Global Growth to Remain Favorable

The outlook for global economic performance is expected to remain favorable in 2017 and 2018 with growth emanating from advanced and emerging markets and developing economies.

The signs of enhanced momentum in the global economy have recently emerged with world output forecast to increase to 3.6% in 2017 and 3.7% in 2018 (2016: 3.2%), the ministry of finance said in its Economic Report 2017/2018 released Friday, Bernama reported.

It said global trade was expected to increase significantly by 4.2% this year and 4% in 2018 (2016: 2.4%), attributed to higher investment and industrial activities.

The report said growth in advanced economies was supported by an upturn in the United States, eurozone and Japan, following improving investment and exports.

“Meanwhile, growth in EMDEs has strengthened further, attributed to firming commodity prices, recovering industrial activity, stabilizing investment and improving confidence,” the MoF said.

The report said global trade firmed up since mid-2016 and was expected to outpace world gross domestic product growth after two years of marked slowdown. Furthermore, it said international financial conditions remained benign and headline inflation had picked up due to higher commodity prices.

The report said the oil prices were firming up supported by strong activity and expectations of more robust global demand, coupled with agreed restrictions on oil supply.

“According to the World Bank, for 2017, oil prices are expected to increase by 23.8% to reach an average of $53 per barrel and to improve further by 5.7% to $56 pb next year,” it added.

Even though a synchronized global economic recovery is underway, reflected by various multi-year high in selected economic data, the report said risks to growth remained tilted to the downside, including rising protectionism, heightening policy uncertainties in major advanced economies and slowing productivity growth and geopolitical tension in some EMDEs.

Nevertheless, expansionary fiscal policy in major economies is expected to provide impetus for global growth, the MoF added.

Meanwhile, another report says, the global economy is on its best roll in years and set to do better in 2018, but economists in Reuters polls around the world mostly said synchronous growth is not about to spawn significant price pressures.

Indeed, while several major central banks have shifted their bias away from ultra-easy monetary policy, with a few notable exceptions, inflation remains below their targets and is generally set to stay that way in the year ahead.