The global economy continued to expand in the first quarter, albeit at a more moderate pace. The persistence of low inflation should limit the extent of monetary policy tightening by major central banks this year, while fiscal policy is also expected to remain stimulative in both advanced and emerging economies. As such, we expect world GDP to match last year’s growth print of 3.8%, although that assumes world governments successfully manage risks posed by trade protectionism and record debt levels.
Global Economy Highlights include:
- U.S. economy firmly on track to grow about 2.8% in 2018. Solid fundamentals suggests an acceleration of growth after Q1. But protectionist policies threaten to disrupt an otherwise promising economic outlook
- Persistence of low inflation should limit the extent of monetary policy tightening by major central banks this year,
- We expect world GDP to match last year’s growth print of 3.8%, although that assumes world governments successfully manage risks posed by trade protectionism and record debt levels
- A weaker-than-expected start to the year prompts us to downgrade our 2018 forecast for Canadian GDP growth from 2.5% to 2.2% We have also pushed to July the timing of an expected interest rate hike from the Bank of Canada
- For a detailed report from our Partners at National Bank Financial Economics HERE.
Our partners at National Bank Financial Economics has reflected on the year that was in 2017 from a global perspective as economists are want to do in order to set the stage for the balance of 2018. The economic vital signs of 2017 are robust and record setting. It’s becoming clearer why world GDP (Gross Domestic Product) growth accelerated sharply last year. Latest data from the CPB showed trade volumes not only reaching a new record but also growing in 2017 at 4.5%, the fastest pace since 2011.
What are Canada’s Economic Vital Signs for 2018?
National Bank Financial Economics offers a cautiously optimistic outlook for Canada as a result of U.S. policies and global growth. Barring the implementation of protectionist policies stateside, Canadian exporters should enjoy positive spillovers from the recently announced ramp up in U.S. fiscal stimulus. Domestic demand will also find support as business investment continues to recover, consumers enjoy higher incomes courtesy of housing wealth effects and a strong labour market,
Private sector investment spending is actually projected to rise 2% this year, the largest increase since 2014. Higher investment is planned in manufacturing, retailing, and real estate among others.
National Bank Financial Economics explores the economic vital signs for Canada in 2018.
Enjoy the detailed global perspective from our partners at National Bank Financial Economics and Strategy Group.