Economic Outlook

World economic momentum peaks

Kiel Institute Economic Outlook World, Nr. 39 (2018 | Q1)

At the start of 2018 the global economy is in full swing. On a PPP-basis growth in 2017 was 3.9 percent, the highest rate since 2011. While leading indicators point to still robust growth in early 2018, sentiment has recently been negatively affected by increasing uncertainty about the pace of monetary tightening in the US and concerns about the future of global trade. Financial market turbulence in the course of the coming normalization of monetary policies and an escalation of trade conflicts constitute major risks to our baseline forecast of a gradually moderating but still robust world economy. We expect global output to rise by 4.0 percent and 3.8 percent in 2018 and 2019, respectively. The upward revision from our December forecast by 0.1 resp. 0.2 percentage points to a large extent reflects the incorporation into our baseline of the US tax reform.