The IMF has revised upwards its forecast for world growth in 2017 to 3.5% vs 3.4% in January. 2018’s outlook remains unchanged at 3.6%.
The IMF has given its US growth outlook for 2017 as 2.3%. This is substantially higher than 1.6% growth achieved in 2016.
France contributed greatly to the Eurozone’s best performance in 6 years during April 2017 with a stronger-than-expected performance. The Eurozone PMI is now at 56.7, the highest in 6 years.
The US economy grew by just 0.7% for Q1. Core inflation has relaxed despite the jobs market powering ahead towards full employment. The Federal Reserve said the slowdown was likely to be due to ‘transitory’.
US Treasury Secretary Steve Mnuchin announced that the US corporate tax rate will fall from 35% to 15% in due course but they are currently working out the specifics. Some analysts believe that the 20% reduction will add US$2 trillion to the deficit over the next decade. The administration are hoping for the changes to pass through this year.
Africa is currently running in a $34bn trade deficit with China (latest figures are from 2015), its biggest trading partner since 2009 when it overtook the US. China currently exports $5.9bn worth of goods to Kenya (Africa’s most advanced economy) but in return currently only imports $99m of goods. President Kenyatta of Kenya has urged China to ‘open up to Africa’ as ‘Africa has opened to China’.
China saw two successive quarters of accelerated growth to the end of March. However April has reported slower growth in retail, factory output and fixed-asset investment indicating that the economy is returning to deceleration. Growth for the year is believed to have peaked already. Despite the slowdown, infrastructure investment rose 23.3% in the year to April and housing investment rose 9.3% in the year to April.
An analyst company – EQT Partners in Sweden, who correctly predicted that Donal Trump would win the US election and that the UK would vote to leave the EU, have said that markets are heading for a ‘sizeable shock’ and that they were focussing on low-risk areas instead like healthcare services and broadband infrastructure.
Japan: Confidence still remains lower than when Shinzo Abe, PM, took office in 2013 but the manufacturing industry is finally growing as the weak yen and a growing global economy offer new outlets towards growth. Unemployment is at just 2.8% with labour shortages in many sectors. It is hoped that the labour shortage will push wages up and feed into consumer spending.
Australia: House prices have risen at their fastest pace in 7 years creating stronger fears of a property bubble. Prices for residential properties grew 12.9% in 12 months with Sydney seeing growth rates of 18.9% which was the fastest in 15 years. Annual growth rates of 10% or more are evident in 4 of the 8 capital cities in Australia. Since 2009, prices in Melbourne have increased 92.4% with Sydney doubling their values. Consumer sentiment fell in March and retail sales were down 0.1% from a forecast of 0.3% growth. Regulators recently issued new rules about limiting interest-only mortgages.
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