TORONTO, Oct. 5, 2017 /CNW/ - Global growth is strengthening as policy stimulus in some advanced economies is unwound. This is a confirmation of the narrative building throughout the year, in which the sources of growth have been broadening across and within countries.
"For the first time since the Global Financial Crisis (GFC), all 45 industrialised OECD countries are set to expand," said Jean-François Perrault, Senior Vice President and Chief Economist at Scotiabank. "Given the breadth of growth geographically and its increasing diversity within countries, the foundation remains for solid global performance through at least 2018, though geopolitical risks continue to dominate."
There are now tangible signs that firms have joined households in contributing to the recovery in most countries, and capital spending in the more advanced OECD countries is expanding at a pace not seen in over three years. This is a welcome development given the general weakness of business investment in companies globally since the GFC. This turnaround in investment appears to reflect a number of powerful factors, such as a rise in confidence as ISM indicators are at multi-year records, the still low cost of capital, and the general increase in trading partner activity.
Highlights of Scotiabank's Global Outlook include:
- Canada: Growth is expected to hit 3.1% during 2017 before slowing to 2.0% in 2018 and 1.5% in 2019 as tailwinds from busy Canadian consumers begin to wane.
- United States: The U.S. economy is forecast to hit 2.2% y/y in 2017, before plateauing in 2018 at 2.3% and decelerating to 1.7% y/y in 2019.
- Mexico: It is too early to determine the likely effects of terrible September earthquakes on the Mexican macroeconomic landscape, but they are expected to be relatively small.
- United Kingdom: The Bank of England will likely deliver a rate hike in November. Moderate tightening is expected to be delivered during 2018, helped by accelerating growth and wage inflation in the new year.
- Latin America: As political situations improve in some countries within the LatAm region, such as Brazil, Colombia, and Chile, the economic performances suggest a gradual recovery.
- China: China is set to remain among global engines of growth, yet real GDP gains will likely decelerate to 6% y/y by the end of 2019.
Read Scotiabank's Global Outlook online at: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/globaloutlook.pdf
Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.
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For further information: Debra Chan, Global Communications, Scotiabank, (416) 866-6443, [email protected]