Trump Fires Up Global Economy

Trump Fires Up Global Economy

Trump Fires Up Global Economy

Thanks to a pickup in manufacturing and trade, the global economy is recovering, but weak productivity and investment growth threaten long-term prospects in developing economies, the World Bank reported.

In its latest global economic forecast, released on Monday on its website, the World Bank forecasts growth in advanced economies will accelerate to 1.9 per cent this year, while it could pick up to 4.1 per cent in emerging markets. The average remains at 2.7 per cent, as reported in January.

“Growth among the world’s seven largest emerging market economies is forecast to increase and exceed its long-term average by 2018,” according to the World Bank’s June Global Economic Prospects.

Recovering activity in these economies are likely to have “significant positive effects” for growth in other emerging and developing economies and globally, the report authors wrote.

Despite the positive prognosis, the World Bank warned that new trade restrictions and persistent policy uncertainty could dampen market confidence and investment.

“Over the longer term, persistently weak productivity and investment growth could erode long-term growth prospects in emerging market and developing economies that are key to poverty reduction,” the report noted.

One of the strong, solid news in the report is trade. Growth in this sector could top four per cent, a noticeable increase following the financial crisis low of 2.5 per cent last year.

“With a fragile but real recovery now underway, countries should seize this moment to undertake institutional and market reforms that can attract private investment to help sustain growth in the long-term,” said World Bank President Jim Yong Kim.

He urged countries to continue investing in people, and to build resilience against climate change, forced displacement and other overlapping challenging.

Global GDP growth is projected to pick up modestly to around 3½ per cent in 2018, from just under 3% in 2016, boosted by fiscal initiatives in the major economies. The forecast is broadly unchanged since November 2016. Confidence has improved, but consumption, investment, trade and productivity are far from strong, with growth slow by past norms and higher inequality.

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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