‘Seize the moment,’ says the International Monetary Fund (IMF).
Global growth is the real winner, though. The IMF thinks we’ll be looking at a 3.6% rate of growth this year. It expects 2018 to fare even better, with a forecast for 3.7% growth. Which is a decent upswing from last year’s rate of 3.2% — the lowest it’s been since 2008.
IMF chief economist Maurice Obstfeld states:
‘The current global acceleration is also notable because it is broadbased: more so than at any time since the start of this decade…
‘This breadth offers a global environment of opportunity for ambitious policies that will support growth and raise economic resilience in the future.’
Developed countries are set to define the growth trend this year. But it’s developing nations that will take the reign next year, according to Obstfeld.
Japan in particular, will no doubt be looking at the data eagerly. Especially as the country heads to the polls in just over a week’s time.
Though, with all this forecast growth, it means interest rates will be in the spotlight once more. Especially as the US Federal Reserve gears up for another potential rate rise later this year.
Darker Days for Australia
While the rest of the world got its tick of approval, Australia was notably left behind.
The IMF cut our growth outlook to 2.2%, which is way down from the predicted 3% just six months ago. That’s a steep decline, something that shouldn’t be taken lightly.
The IMF is blaming the weather, saying that during the first half of the year, Mother Nature slowed housing investments and mining exports — two of our main economic pillars.
So while the rest of the world basks in growth not seen in over a decade, we’ve been left behind. Perhaps it’s our due; after all, we basically dodged a bullet in 2007/08.
The ‘bad weather’ that the IMF says hampered this year could in fact, be an ill omen. An economic storm could be brewing. HSBC Australia’s chief economist Paul Bloxham put it bluntly, stating: ‘Australia will almost certainly have a recession at some point…’
Bloxham believe that our 26 years of uninterrupted growth is a sure sign of darker skies ahead. The only question that matters, is whether that day of reckoning will arrive sooner or later.
Don’t leave yourself high and dry when the storm hits. Read up on our free Aussie Recession Survival Guide right now.
Junior Analyst, Markets & Money