Global GDP growth is expected to end up at +2.5% in 2016, showing resilience in spite of the many economic and political hurdles. In 2017, growth should pick up to +2.8%, staying below +3% for the seventh consecutive year.
The US would benefit from a fiscal boost pushing growth to +2.4% in 2017. After a year of uncertainty and economic pause, the aftermath of the election is already bringing confidence back. The active policy-making should spur private investment if political noise, tighter financing conditions, and renewed protectionism are contained.
The Eurozone will grow +1.6% in 2017. It will continue to face its usual set of teething troubles from Brexit and the Italian banks situation to a busy election year in key countries. Strong institutional stopgaps (accommodative monetary policy, fiscal stimuli, and European programs) will help contain risks.
China will address its fragilities such as credit risk and excess capacities to avoid volatility. Yet strong public support and cautiously accommodative monetary policy will help reach +6% growth this year.
In emerging markets, the absence of a broad-based acceleration will increase selectivity. Private sector spending will be pivotal in some countries (e.g. Russia and India). The business cycle may be limited by ongoing adjustments in others (Brazil and South Africa), while another group of countries may even face growing imbalances (Mexico, Turkey).
Reflation, isolationism for trade and financial flows, along with policy nudges, will shape most of 2017-18 risks and opportunities for businesses around the world.
Superheroes, sidekicks and villains: The Guardians of the economy