Global Economic Outlook, 2017

Geopolitical Events and Restrained Demand to Boost Economic Uncertainty
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Published: 22 Mar 2017

The year 2017 will be the sixth year of global stagnation and the global economic outlook indicates a slow-growing global economy, ranging from 3.0% to 3.4% Gross Domestic Product (GDP) growth. Global economic growth and business confidence have had a mixed impact thus far. The world has entered a period of greater geopolitical uncertainty. Geopolitical events, restrained demand, and weak investments will take a toll on the global growth trajectory. Lack of business confidence due to global uncertainties will make investors wait and watch, which in turn could slow the progress further. In 2017, the US economy is likely to pick up modestly from stronger business confidence. Internal economic activity in Europe and Japan is also stronger. However, uncertainties of different kinds are weighing down on emerging markets’ growth prospects. The question of rising interest rates is a fundamental one in 2017. In the short term the interest rates have gone up because of the US election. Having said that, there are more fundamental forces that are supporting a sustainable rate rise across the world. All major central banks such as the Federal Reserve, the European Central Bank, and even the Bank of Japan have started withdrawing from an accommodative monetary policy since 2016. This progressive withdrawal of accommodative monetary policy will ensure that the rate rise is actually sustainable. On the positive side, oil and commodity prices are expected to recover somewhat. The outlook for advanced economies has improved for 2017–2018 due to stronger activity in the second half of 2016 as well as an expected fiscal stimulus in the US. Given this, businesses need to stay focused on strengthening growth factors, such as technology, innovation, skills, and possible disruptive forces. Down the road, new digital tools and technology could increase workers’ productivity everywhere. Businesses can prepare for their own disruptions and invest in their own disruptive strategies. It will be fruitful to leverage digital technology to strengthen the capabilities of the workforce so that they can be used more productively. These measures can help shorten the long period of slow global growth. The key questions that this Frost & Sullivan research will answer are: • What is the global macroeconomic outlook? Will global growth gain pace in 2017? • What are the top economic trends of 2017? • What are the most important economic predictions of 2017? • How can major geopolitical events affect global growth? • What will be the future of trade, investments, interest rates, inflation, oil and commodity prices in 2017? • What are the region-specific growth trends, risks, and policy challenges?



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