Wednesday 14 April 2021
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Global Economic Outlook

According to Standard Chartered, global growth is forecasted at 3.9 per cent in 2018. Interestingly, growth in the United States and European Union is expected to exceed ten year averages. Former United States of America President John F. Kennedy famously said in a speech many years ago, “a rising tide lifts all boats.” And so we remain optimistic that global growth will to some extent raise incomes, and aid with budget deficits the world over.
The Global economy when split up by the Gross Domestic Product (GDP) of each country paints an interesting picture. A simple measurement of understanding GDP is the total value of all economic activity within a country. According to the World Bank report of 1 February 2017, the top 5 economies measured by this are the USA at 24.3%, followed by China at 14.8%, then Japan at 5.9%, Germany at 4.5%, closely shadowed by the United Kingdom at 3.8%. This equates to 53.3% of the global economy by GDP with a mere 5 countries. Out of interest, South Africa measured 0.4% of the world economy – a drop in the ocean.

Emerging Markets
World emerging markets have struggled in recent years, this is mainly due to the low commodity prices and slower global demand. Predictions are that 2018 can however expect higher commodity prices, coupled with global growth, which will enhance economic activity in many of the emerging markets.
South Africa’s economy remains constrained, with high levels of unemployment weigh on fixed investment and lower private consumption. Political uncertainty has been the shortcoming of Africa’s most powerful economy, albeit new leadership and strong competition may show sustained signs of improvement in consumer confidence. A growth rate of around 1.3% is forecasted for 2018.
China remains constant in its slow but steady deceleration, one of the world’s leading economies shows no real signs of drag and will continue to grow in the region of 6% for 2018. A concern remains excessively leveraged state owned companies, which will continue to have major impacts on global trade.
Other emerging markets such as Brazil and Russia with its low interest rates, improving confidence and low inflation will see an acceleration in growth for 2018. Economic policy remains prudent with any real sustainable growth for both economies relying heavily on political stability. GDP should remain stable in both Russia and Brazil, with growth for 2018 predicted to be around 2.4% in Brazil and 1.9% in Russia.
The United Arab Emirates, commonly referred to as the UAE, is expected to grow significantly in 2018 by just over 3%. A large recovery in the price of oil and preparations for the Dubai 2020 word expo should see large fixed investment flowing in.
The Bank of Namibia (BoN) released an economic outlook in December 2017, which stated that there were upsurges in both the wholesale and retail sectors, in addition to growth in the mining segment. They have forecasted a growth rate of 3.1% in 2018, which I consider highly optimistic. This optimism is mainly due to the increase in the commodity price of uranium and other mining sector initiatives in the country. The building sector has also seen an uptick in 2017, which is expected to continue through in to 2018.

My View
There are a number of world affairs that can have a substantial impact on the global economy, to highlight a few I would list the following:
Firstly, the oil-rich Middle East. Any major changes to oil production and the supply thereof remains a threat. Secondly, rising government debts the world over. Seemingly most emerging markets are taking on unprecedented levels of debt which will continue to impact the end consumers – the citizens of that country. Thirdly, a Eurozone currency crisis. Whether the European bank has sufficient foreign exchange reserves to maintain the fixed exchange rate wait to be seen. There is a definite balance of payments deficit, which can greatly impact the Euro currency. Angela Merkel will remain a crucial cog as she tries to form a coalition government and restore political stability to the world’s 4th largest economy.
In conclusion, we must pray that terrorism comes to an end, that all conflicts cease, that world leaders find amicable treaties above their inflated egos, and that greater respect and honest dialogue can return. I am optimistic for a better tomorrow, and a 2018 of great change and purpose.

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