Economic Outlook

World economy is gaining traction

Kiel Institute Economic Outlook World, Nr. 25 (2016 | Q4)

World economic growth has picked up from the sluggish pace registered at the start of the year.  We expect global growth at PPP exchange rates to accelerate to 3.5 and 3.6 percent in 2017 and 2018, respectively, up from 3.1 percent this year. Growth in advanced economies will continue at a slightly faster pace, fueled by expansionary monetary and increasingly also fiscal policies, particularly in the United States. Rising wages will also underpin growth. Despite the recent agreement of oil producers to cut production, we do not assume oil prices to rise sharply as implementation of the agreement is expected to be only partial and the global oil market should remain well supplied for some time to come. Growth in the emerging economies is set to accelerate gradually over the forecast horizon, but persistence of relatively low commodity prices and structural impediments to growth should restrain the growth momentum going forward.