Growth in the global economy has started to recover, increasing 3.1 percent in 2016, and driven by increased trade flows, improved import demand and firming commodity prices in emerging markets, explains the research team at Wells Fargo Securities.
“Potential “trade-wars” and growing corporate debt in China remain downside risks to growth. That said, we expect global growth to rise even further and forecast that global GDP growth will strengthen this year and the next, rising 3.3 percent in 2017 and 3.4 percent in 2018.”
“With the collapse in commodity prices largely behind us, growth in trade volume has strengthened for most of the year. The surge in export volume, up 6.1 percent year over year, marks the largest yearly gain since April 2011. Global industrial output rose 3.1 percent on a year-ago basis in March, up from the 2.9 percent the month prior.”
“Inflation indices have lowered in developed and emerging nations, and the aggregated CPI index slowed to 2.3 percent year over year. Lower energy prices have been the main culprit behind the contraction in price inflation; however, core inflation metrics in several countries have also shown signs of cooling.”
“With slowing prices, several central banks in the OECD groups are cautious in their monetary policy. However, with the U.S. Fed recently raising its fed funds rate 25 bps to 1.25 percent, we could see a growing number of central banks start to adopt a less dovish monetary policy.”