‘Strictly’ Synchronized Growth
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Economic growth, a barometer of economic health, appears to be accelerating globally. In general, the economic environment is dancing along nicely, with low unemployment, a rise in job creation (we mentioned 13 million new jobs created in China in 1 year in last week’s note) and rising gross domestic product growth in both developed and developing economies. All of this has the potential to contribute to higher wage growth which has proved elusive.
The International Monetary Fund (IMF) has revised forecasts upwards as synchronised growth comes through globally. Their 2018 and 2019 world economic growth forecasts were lifted by 0.2% meaning that global expansion is expected to grow 3.9% in 2018 and in 2019. If the forecasts are achieved it will be the fastest world growth rate in 7 years. IMF Managing Director Christine Lagarde voiced to reporters in Davos at the World Economic Forum, that strong economic growth offers a “perfect opportunity now for world leaders to repair their roof”. What she meant by that comment is open to interpretation, but basically we believe it means dealing with structural problems such as too much debt which can hold economies back and make them especially vulnerable at times of economic stress.
IMF Global Growth Forecasts
Source: IMF, January 2018
One reason for the IMF lifting their forecast has been the US tax cuts bill passed in December last year. They believe this will boost the US economy at a time when it is already showing self sustaining growth and delivering stronger job creation. The IMF has increased their US 2018 GDP growth forecast to 2.7%. This is 0.4% higher than their initial forecast in October.