The World Economy: Forecast Summary

Last year the global economy expanded at its fastest pace since 2011. We expect global growth to continue at a similar rate in 2018 and 2019. We expect the pace of global economic expansion to slow to around 3.5 per cent a year in the medium term unless productivity growth picks up substantially. Although some advanced economies appear to be operating at close to full capacity and oil prices have increased, our expectation is that any rise in inflation will be muted. Central banks will only raise policy interest rates gradually. Recent announcements on tariff increases by the US and retaliations to these have added to the uncertainty about the global economic outlook. Ongoing trade talks create the potential for a rapidly changing situation which could create surprises to the global forecast outlook.