All of the top 25 global economies are set for growth in 2018, achieving an average growth rate of 2.8%, according to recent forecasts by GlobalData, a leading data and analytics company.
The top 3 fastest growing economies will be India, China and Indonesia, respectively. India’s GDP growth rate of 7.4% is being driven by the present Governments macroeconomic reforms which includes the unified Goods and Services Tax (GST) and demonetization among other policy measures. Indonesia’s strong GDP growth rate of 5.2% reflects booming inward investment in the country together with the Government’s public sector budget increases.
GlobalData’s analysis also included a review of a number of other macroeconomic indicators, namely:
Inflationary pressures to remain under control
With the exception of Argentina, where inflation is likely to peak at 18.8% in 2018, inflationary pressures are projected to remain largely unchanged across the top 25 global economies in 2018 at an average rate of 3.2%.
Unemployment set to remain high
Unemployment is set to remain high in major economies like Belgium, France, Italy, Spain, Argentina, Brazil and Turkey throughout 2018.
Ramnivas Mundada, Practice Head for Economic Research at GlobalData, commented, ‘‘Spain is likely to witness the highest unemployment rate of the top 25 economies at 15.6% owing to the countries stringent labour laws which basically protect workers from getting fired and can therefore discourage employers from hiring new employees. Another contributing factor to the countries high unemployment rate is Spain’s weak recovery from the 2008 crisis.’’
Spain is followed by Brazil and Italy where unemployment forecasts are set to stay at 11.8% and 11%, respectively.
Mundada continued, ‘‘Though the rate is declining, unemployment remains a concern in Brazil as the fall in commodity prices has reduced the demand for labour in key sectors like agriculture and industry.’’
Overall, most major economies are expected to see a decline in unemployment rates in 2018 compared to last year.
Low commodity prices threaten further economic downturn in some economies
Downward pressure on commodity prices is expected to continue to reduce the revenues of major commodity goods exporters like Brazil and Saudi Arabia causing major fiscal imbalances in these countries. As a result, Saudi Arabia’s government is planning to push back the target date of removing its budget deficit from 2020 to 2023.
Mundada added, ‘‘The less diversified a major economy is the more it will be effected by lower commodity prices as revenues falls. Despite a marginal commodity price recovery in recent years, they still remain significantly lower than their pre 2015 price crash levels.’’