A Breeze of Growth


  • ​Global growth is accelerating (at last), yet not all engines are in sync. A disappointing U.S., reassuring Europe and stabilizing Emerging markets create good – not great – momentum. We forecast GDP to grow +2.9% in 2017 and 2018, unchanged from our last scenario. It will be the seventh consecutive year below 3%. 
  • There are five boosters behind the pickup in growth: (i) inflation is (partially) back creating a nominal boost to confidence and investment; (ii) consumption and turnovers are up as a result; (iii) trade is adding half a point to headline growth, after two years of contraction in value terms; (iv) the policy mix is a major plus; and (v) political nudges are underestimated.
  • ​However, growth quality is at stake: confidence, investments, trade, and jobs are up while the political risk, private debt and inflation should remain under scrutiny. For each booster, there is a reason to worry: (i) reflation could create a jaw effect; (ii) the investment cycle is financed largely through debt; (iii) protectionism is not receding; (iv) the risk of a flat tire for policy-makers is high if faced with a new crisis; and (v) political risk and markets could reconnect soon.