Home » Breaking News, Customs & Trade » Global economy shows positive turnaround for 2017—report

The current cyclical upswing and recovery in productivity will raise global growth to 2.9% in 2017, up from 2.5% last year, according to The Conference Board’s latest global economic outlook.

The global economy shows a widespread strengthening of leading indicators around the world, especially in emerging markets, said the report. While most of 2015 and 2016 showed a weakening in business cycle dynamics, the recent turnaround reflects a confluence of positive forces.

“Strong consumer and business confidence, strengthening stock markets, a turnaround in the global industrial cycle, and a recent rise in the rate of global trade all point to strengthening cycle dynamics,” said Bart van Ark, chief economist of The Conference Board, a global business membership and research association based in the U.S.

At the same time, van Ark warned that the recovery, which is supported by a pro-cyclical improvement in productivity, could die out if businesses do not accelerate investment.

“The current upside to growth opens the door for businesses to catch up on their digital transformation to strengthen their growth base and allow them to weather the longer-term, structural headwinds which remain,” he added.

Van Ark was referring to medium-term challenges such as the slowing labor supply and “the slow pace by which new technologies translate themselves into a higher growth potential for the global economy.”

The Conference Board Global Economic Outlook update for May reveals that mature economies will see a small improvement from 2% in 2016 to 2.1% in 2017.

Europe is projected to improve to 1.8% for 2017, but the gain is entirely offset by the downward adjustment for the United States from 2.5% to 2.2%. This year-over-year U.S. figure has changed because of a weak first quarter, estimated at only 1.2%.

The weakening outlook for the UK due to increasing uncertainty on economic policy and the Brexit strategy points to increasing risks in that outlook.

Emerging markets, on the other hand, are showing notably better GDP performance at 3.6% in 2017 over the 2016 level of 3%, said the report.

In Asia, the Indian economy has for now rebounded remarkably in the aftermath of the demonetization in late 2016, while China beat expectations with a fairly strong first quarter, benefiting from the strengthening of the global industrial cycle.

Other Developing Asia, which encompasses mostly the countries in Southeast Asia, is projected to grow by 5.1% in 2017.

The report also highlights some improvement in productivity growth. Global labor productivity growth is projected to reach 1.9% for 2017, distributed fairly equally across mature economies and in emerging markets. This implies that productivity growth in 2017 will account for almost two-thirds of GDP growth in 2017; it contributed less than half in 2016.

The Conference Board Global Economic Outlook 2017 provides projections for short-, medium-, and long-term output growth of the world economy. The Conference Board has been publishing its annual outlook since 2008.

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