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The global economy started 2017 strong with real GDP growth gaining momentum and rising to 3.6 per cent in Q1 2017 and the previous uncertainty surrounding the global growth forecast receded since May 2017, says a Euromonitor International report.
The Global Economic Forecasts report maintains its global real GDP growth forecast at 3.5 per cent for 2017-2018. Despite standing above the annual 3.2 per cent growth in 2016, the forecast is still considerably below the pre-crisis growth levels, it said.
For advanced and emerging economies, economic activity is forecast to accelerate, reaching 2.0 per cent and 4.7 per cent growth, respectively, in 2017. Emerging markets, however, will remain a principal driver of the global economic growth, accounting for as much as 74 per cent of the world’s real GDP expansion, and this share is predicted to surge further up to 79 per cent by 2020, the report said.
The macroeconomic outlook shows the previous uncertainty surrounding the global growth forecast receding since May 2017. The political risks have diminished in Europe, with the region rebounding more strongly than expected and populist parties performing worse than expected in a number of Eurozone elections, which suggests that the populist surge might be beginning to fade.
However, some of the most urgent global risks presently are stemming from the unexpected US policies, rising geopolitical tensions, uncertain outcome of Brexit negotiations, or the possibility of a sharper than estimated China growth slowdown, it said.
These changes could complicate the macroeconomic situation in major economies with negative spill-overs to other countries and result in damage to their private confidence, investments and overall economic growth, it added.
The US GDP growth is forecast at 2.0 per cent in 2017-2018, reflecting a mix of lower expected costs of protectionist policies, combined with scepticism about major fiscal stimulus.
After years of disappointing growth, the Eurozone economy is booming. In line with the strong first half performance, the zone's GDP growth is forecast to be 1.8 per cent in 2017 and 1.7 per cent in 2018.
The UK economic situation is growing gloomier. The baseline real GDP growth projection for 2017 remains unchanged at 1.5 per cent. In 2018, the growth is forecast to drop further to 1.2 per cent, the report said.
Demonetisation has hurt Indian economic growth to an extent higher than expected. The report downgraded the real GDP growth forecast to 6.9 per cent in 2017 and to 7.5 per cent in 2018.
China’s economy showed resilience in the first half of the year, but is expected to slow down in the second half, leading to 6.6 per cent growth for 2017. GDP growth is expected to decline to 6.2 per cent in 2018.
China’s new home prices grew in January although major cities saw early signs of softening, as the government continued its efforts to rein in speculative demand to fend off bubble risk.
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