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May 24, 2017

Global Economy: Global growth in a slow grind-up

  • Tepid growth in consumption expenditure in the United States and services sector output in the United Kingdom slowed overall GDP growth in these economies in Q1 2017
  • In China, higher government spending and booming property market pushed up secondary sector growth in Q1 2017
  • Energy commodity prices rose in April riding on the increase in crude oil

Most economies grew at a slow pace in Q1 2017. While growth mellowed in the United States and the United Kingdom, and remained stable in the Euro area, it was better than expected in China.

Despite slower growth recorded in Q1 2017, the International Monetary Fund (IMF) expects world growth to improve this year compared to the last. In its April outlook, the IMF revised the world growth projections upwards by 10 basis points (bps) to 3.5% for 2017. However, the projections are subject to downside risks, the key being an inward shift in policies, including trade protectionism. With persistent structural problems - low productivity growth and high-income inequality - popular and political pressure for inward-looking policies is increasing in advanced economies, threatening global economic cooperation. Although the recent victory of the centrist Emmanuel Macron in the French presidential election, signals hope for global (or at least European Union) integration, the threat of protectionism from other large economies still looms large