Vol 14 (2017) - Issue 3

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Improved Global Growth

Global growth has improved and reached its longterm trend of 3.6% (Exhibit 1), sparking a recovery in global trade (Exhibit 2). Barring any policy mistake, this growth rate should be sustained over the next few years. Developed markets (DM) should post a small improvement to 2% from a 1.7% growth rate in 2016, while EM are set to reach 4.6% from 4.1% last year. The ending of the sharp contractions in Russia and Brazil helps.
Inflation will start to firm gradually and commodity prices stabilise. Our working assumption is that Brent will continue to trade broadly sideways, fluctuating in a range of $52-55 per barrel.