Global Economy to Grow at 3.2% in 2018

The global economy will expand at 3.2 per cent in 2018, matching the rate of growth achieved in 2017, according to an annual forecast by business information provider IHS Markit. It will be the first time since 2011 that global economic growth will top 3 per cent. Growth in emerging markets will rise from 4.7 per cent in 2017 to 4.9 per cent in 2018.

Emerging economies in the Asia Pacific and Latin America will outperform emerging Europe and Sub-Saharan Africa.

“We expect continuing expansion in the US and emerging markets to offset plateauing in the Eurozone and Japan. While economic risks remain, most are low-level threats to the overall picture for 2018,” said Nariman Behravesh, chief economist at London-based IHS Markit. The forecast is part of Behravesh’s annual Top 10 economic predictions.

Strong economic momentum in the United States will carry over into 2018 and economy there will grow at 2.6 per cent next year, up from 2.3 per cent in 2017 and well above the 1.5 per cent growth in 2016. Economic fundamentals and increasing employment in the U.S. will provide strong tailwinds for consumer spending, capital expenditures and housing, the forecast says.

IHS Markit predicts a 2.2 per cent growth in European economy in 2018. Non-performing loans in Italy and Spain and the risk of a ‘hard’ Brexit are among threats to continued economic expansion in the continent. Economic growth in the United Kingdom is expected to slow down to 1.1 per cent in 2018, from 1.5 per cent in 2017.

The economic growth rate in China will continue to decelerate from 6.8 per cent in 2017 to 6.5 per cent in 2018, primarily due to excess industrial capacity, debt overhang and a housing glut.

Japan will begin to level off after seven quarters of growth. Continued growth in Japanese exports, resilient domestic demand and infrastructure investment ahead of the 2020 Olympic Games contribute to the IHS Markit forecast of 1.2 per cent growth in 2018, a press release from the company said citing the forecast.

The price of Brent crude will average $56 in 2018 and with little upward pressure from oil, other commodity prices are likely to be range-bound, but volatile, the forecast added.