Preliminary estimates peg 2017 global GDP growth at 3.0%, which is up from 2.4% in 2016. Among the reasons was a pickup in growth in the United States from 1.5% to 2.2% and Euro area growth from 1.8% to 2.4%.
Despite 2018 growth expected to accelerate only slightly from 2017 growth, the composition of the growth is expected to change substantially, as the chart below shows.
Some of the specific changes in 2018 include:
- A slowdown in China‘s growth, despite a continuing high rate of growth in excess of 6%. Economists have long felt Chinese growth would likely moderate due to significant debt build-ups and additional competition in manufacturing. However, with pick-ups in both the United States and Europe over the last eighteen months, if a Chinese slowdown were to occur, it could not have been timed much better.
- Further weakness in Japan as long-term structural problems persists.
- A sizeable acceleration in the rate of GDP growth in India, which will make it the world’s fastest-growing economy.
- A pick-up in Brazil, which is recovering from corruption scandals and fiscal instability, but may at least be set to begin economic normalization. If commodity prices remain at least stable, Brazil could get close to 2% growth in 2018.