The World Economy - An Interesting Place Right Now

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The world economy is in an interesting place, rarely seen, of low inflation/synchronized growth. The April IMF World Economic Outlook (WEO) notes, “The global economic upswing that began around mid-2016 has become broader and stronger." Importantly, the Fund expects developed countries to continue growing above trend. Growth in 2017 was 3.8%, fastest since the post-recession 2011 and with growth to tick higher to 3.9% in 2018. The Fund expects developed countries to sink back to sub-2 percentage growth, which is the leading question of our time: can we break out of a New Normal of paltry growth? Growth is picking up at a time when inflation is moving lower. The Fund believes that global inflation will remain around 3%, with Emerging Market inflation around 4%. This is a major development, which cannot be overemphasized. Current trends remain positive, though growth has ticked lower from Q4 2017. Looking at manufacturing PMI’s we see that only South Korea is below 50 (indicating expansion), though no country now is above 60 (as had been over the past four months in Australia, the U.S. and Germany). Still, we see a robust global economy, which is much improved over the past year. - Special Guest Blogger: Tim Kearney, PhD

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