Economic Outlook

Sustained acceleration of the world economy

Kiel Institute Economic Outlook World, Nr. 31 (2017 Q2)

In the middle of 2017, the world economy is experiencing robust growth. Especially in the advanced economies economic sentiment is upbeat, despite considerable economic policy uncertainty. We have increased our forecast for global GDP growth—on PPP basis—by 0.1 percentage points both in 2017 and 2018 to 3.6 percent and 3.7 percent, respectively. In the US, output growth is expected to strengthen to 2.2 percent this year and 2.5 percent next year, in part reflecting significant fiscal stimulus. The recovery in the euro area should continue at the current pace of around 2 percent per year. While growth in most emerging economies will likely increase, we expect China’s economy to gradually decelerate. Major risks for the forecast emanate from political uncertainties and potential financial disruptions in the process of the normalization of monetary policy, which is already underway in the US and will be increasingly on the agenda in other economies such as the euro areal.