Global growth is at its strongest since the financial crisis that began exactly ten years ago.
World GDP growth could approach 4% this year, slightly up on 2017 and far ahead of 2016’s 3.2%. The recovery gives countries an opportunity to implement reforms to improve infrastructure and welfare policies in response to fears about productivity and wages and the impact of automation. Yet few countries are finding the budgets and political will to do so. Geopolitical risks are not yet affecting markets, but have helped commodity prices recover. However, the risk that US policy prompts a trade downturn will linger throughout President Donald Trump’s term. Other risks include tighter monetary policy and a financial market downturn.
- What is the direction of the dollar given the competing forces of rising rate differentials and high policy risks?
- Are US bonds close to bear market, traditionally an indicator of imminent recession?
- Will policy be able to address the unpredictability of disruptive technology on jobs and wages?
- Will rising unemployment cause the anti-globalisation backlash to start effecting some emerging economies?