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Robust Global Economic Environment Ahead Predicts JLL
Despite early weakness in the beginning of 2018, the global economy looks like it’s on track to rebound for the remainder of the year, according to new research by JLL. The report points out an interesting wrinkle. The weakness that showed up across a large swath of developed economies in the first quarter, appears to be temporary, as faster growth is anticipated to emerge in the latter half of the year.
JLL’s Ryan Severino notes, despite the fact that the Fed continues to raise rates, other major central banks around the world haven’t budged. He writes, “In the U.S., despite relatively slow growth during the first quarter, the impact of the fiscal stimulus should push 2018 to challenge 2015 for the high watermark during the current expansion.”
The U.S. remains an important driver of global growth, so a resurgence in the coming quarters should support a continuing global expansion. Growth in Japan and the UK, which also disappointed in early 2018, should rebound, albeit below 2017’s growth. Meanwhile, growth in the Eurozone slowed in the first quarter, but looks unlikely to rebound in the next few quarters.
Severino writes, exports in a robust global economy should support the U.S. economy, through presents two risks. A rising U.S. dollar would make U.S. exports relatively more expensive around the world, while making imports into the U.S. relatively less expensive. That would, all other things equal, widen the trade deficit, potentially slowing U.S. economic growth and feed into the second key risk, trade protectionism.
Other key JLL findings:
– Divergent monetary policy marks one of the defining features of the current landscape
– As U.S. interest rates widen relative to the rest of the world, it is expected to pull capital into the U.S. and away from other countries
– Global trade could increase by roughly 4% in 2018, notwithstanding trade policy decisions that loom over that forecast
– The rise of populism in many places around the world has put migration flows at risk. Coupled with a slowdown in labor force growth, which will restrict economic growth, and developed economies will rely on productivity growth to drive growth. That presents risk because productivity in the developed world has been declining.
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Economy
