Oil prices continue to rise, dollar to strengthen, and the global economic system will remain stable (the risk of a global recession is no greater than 25%). These estimates are contained in the ten main forecasts for 2017 on Tuesday, December 13, published a research company IHS, Markit (presentation is at).
Political shake-up in 2016, has shattered stereotypes of the world community, but, paradoxically, improved the economic Outlook for the future, from the presentation IHS Markit for 2017. Next year will be dominated by positive factors. According to the forecast, growth of world GDP by the end of 2017 to accelerate against the 2016 year (2.8 vs. 2.5%), in 2018 the global economy will increase by 3.1%.
Acceleration in the United States and developing countries
The US GDP growth in 2016 was worse (plus 1.6%) than the IHS, Markit predicted a year ago — a consequence of the reduction of stocks, net exports and investment in the energy sector. But in 2017 and 2018 the situation will improve, experts expect. And this happens even before the President-elect Donald trump will implement a previously announced an ambitious program of fiscal stimulus. The latter will support economic growth and inflation, IHS expects Markit. Real GDP increased in 2017 and 2018 of 2.3 and 2.6%, follows from the forecast. This will contribute to a slowdown in the reduction of stocks and increase investments in the energy sector. Investment in industrial production will decrease.
The outcome of the US election will have a mixed impact on emerging markets. On the one hand, it will give global growth stable, but will also contribute to the rise in the cost of commodities. On the other hand, an interest rate hike in the US will force European Central banks to adopt a restrictive strategy, and the strengthening of the American currency will increase the debt burden on dollar borrowers. Fundamental economic factors in many developing countries has improved in recent years, which reduces the risk of financial crisis. It will accelerate growth in 2017, experts predict.
By the end of 2016 in the Eurozone resumed growth. While Europe faces serious challenges: Brexit, the consequences of the Italian referendum and elections in Germany, France and the Netherlands. In particular, political instability in Italy threatens to trigger a banking crisis. A stronger dollar generally has a positive impact on Europe, experts say. Positive trends, the experts at IHS, Markit attributed the expansion of the program of the ECB for buying bonds, as well as the increase in exports and inflation due to a weaker Euro. Together, these factors will weaken the real GDP of the Eurozone in 2017 (plus 1.4 percent) versus 2016 (plus 1.7 percent), according to the forecast. The UK economy will slow even more in 2017 (plus 1.3 percent) versus 2016 (plus 2.1%), experts say.
China’s economy also continues to slow amid a decline in construction and automotive sectors. Due to concerns about a bubble in the property market, the Chinese government began to minimize the program of support to the sector. In addition to construction, these measures will hit heavy industry. Among other issues, China — capital outflow (foreign currency reserves are at five-year low, and the RMB exchange rate returned to the level of 2008), the decline in retail sales, exports and investment activity. Against this background, IHS, Markit expects that economic growth in China slowed in the next two years in 2016 and 2017 it will amount to 6.7 and 6.4%, respectively.
Rising in price oil
Raw material prices continue to rise, however, observed for the last time on this occasion optimism was disproportionate, says IHS Markit. According to experts, the recent OPEC agreement to reduce production will help to move from a slight oversupply to a shortage. While negotiated agreements should look carefully — in the past, OPEC repeatedly executed taken for obligations. In addition, the rise in oil prices, apparently, will lead to the expansion of production in the United States. Against this background, IHS, Markit, has improved its forecast for Brent at the cost 2017 $2, to $54 per barrel.
The strengthening of the dollar
Strong enough, the dollar rose even more after the victory of trump. At the end of November, the U.S. currency was at an eight-month high against the yen and a 20-month high against the Euro. Currencies of several developing countries fell against the dollar to a historic low. IHS Markit is waiting for further strengthening of the dollar in 2017. According to the forecast of the company, to the end of the year the European currency equal to the U.S. (1:1), and the yen weakens against the dollar to ¥126 to the dollar (the rate as of 14 Dec — ¥114,98 per dollar). The depreciation of the already weakened emerging market currencies should slow down, experts predict.
Among the dozens of major global economic Outlook IHS Markit also said risks of a trade war in which the US economy and other countries will be in recession. Policy, emerging in the growing anti-globalization sentiment in the U.S. and Europe, threatens to damage economic growth, warns IHS Markit. In 2017, the U.S. will continue to increase interest rates, pushing the growth rates in emerging markets, experts expect. The following year, the U.S. financial regulator could three times to tighten monetary policy, says IHS Markit. In addition, because of the strong dollar in 2017 the United States will continue to “export” inflation in other countries — the weakening of the national currency, in turn, will spur imports and consumer inflation, according to the IHS presentation Markit.