Great Expectations for Global Growth
We have seen some surprises in global markets and economies thus far in 2017. The biggest risk to global growth – political risk in Europe – has largely been defanged, but political risk in the US and Latin America is gaining strength. Economies in China and Europe have also surprised on the upside, spurring expectations for more synchronized growth among developed economies.
There has been a transition, from business investment-depressing excess supply, to a more balanced supply and demand dynamic. This “regime change” among markets is the result of years of underinvestment and record numbers of capacity-reducing mergers and acquisitions. The resulting rebound in business spending is the main driver of our more optimistic forecast for stronger and more synchronized global growth.
We believe 2017 will be the year when more bullish growth expectations will finally be validated.