Watch/Listen

60 seconds on the global economic outlook for 2018

The Schroders Economics Team has revised up global growth forecasts for 2018 due to expectations of looser fiscal policy in the US and stronger global trade.

01/12/2017

Craig Botham

Craig Botham

Emerging Markets Economist

We’ve just updated our global economic outlook for the next two years, and we’ve revised up growth for 2018 to 3.3% from 3% previously. This marks a small acceleration from 2017, but more importantly, it would be the strongest growth on record since 2011.

This upgrade has been driven by expectations of looser fiscal policy in the US but also, on a global basis, stronger trade.

Unfortunately, stronger growth means faster inflation, with 2018 likely to surprise to the upside after 2017 came in weaker than expected. Price pressures are going to rise as spare capacity is eroded by growth, and stronger oil prices mean higher energy costs.

Consequently, we’re expecting central bank policy will be a bit tighter next year than it has been this year.

We think we’ll have three hikes coming from the Federal Reserve in the US; we think the European Central Bank will end its quantitative easing (QE) programme in September 2018; and the Bank of Japan will have to reduce its own QE purchases throughout the year compared to what we had expected previously.

Important information: This communication is marketing material. The views and opinions contained herein are those of the named author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (Schroders) does not warrant its completeness or accuracy. The data has been sourced by Schroders and should be independently verified before further publication or use. No responsibility can be accepted for error of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Past Performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.  Exchange rate changes may cause the value of any overseas investments to rise or fall. Any sectors, securities, regions or countries shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. Forecasts and assumptions may be affected by external economic or other factors. Issued by Schroder Unit Trusts Limited, 31 Gresham Street, London, EC2V 7QA. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority.