Political changes increase uncertainty surrounding global economic outlook

Abstract

The global economy is envisaged to grow at a pace of well over 3% in 2017–2019, i.e. slightly faster than in 2016. World trade growth will accelerate during the forecast period, but will remain slow relative to GDP, as in recent years. The markets’ first impressions of the future stance of US economic policy have strengthened the dollar, reinforced inflation expectations and raised long-term interest rates especially in the United States, but also in Europe. Overall, estimates of forthcoming US economic policy are still on shaky ground. Brexit will cloud the growth outlook for the United Kingdom, in particular, but also for the rest of Europe. Euro area growth is expected to continue at a fairly brisk pace, driven by domestic demand. Chinese growth will remain strong, sustaining recovery in the global economy.