Global Growth Outlook

The global economy is set to pick up substantially in 2017. Growth is expected to reach 3.5 percent, gathering pace by 0.5 percentage points. Global trade should accelerate by three to four percent. The German economy will grow by 1.5 percent.

The biggest impetus is likely to come from the United States as of the summer. The Trump administration and Congress are planning to cut corporate and income tax and step up defence spending. These developments will increase the federal budget deficit and the current account bal-ance accordingly. The new protectionism harbours big dangers, however.

Under Donald Trump, the dollar is expected to surge by five to ten percent against the main global currencies in the course of the year. At least initially we will see increased volatility in the currency exchange rates. Adjustments will be fuelled by transatlantic differences in economic and interest rate development as well as profit repatriation.

This will moderately boost net exports and investment in the euro area and Japan, further consolidating economic recovery in the EU. The downward pressure on the renminbi, in contrast, will hamper China’s stabilisation efforts.

In key emerging countries, rising interest rates and an appreciating dollar will increase vulnerability to high dollar debt in the private sector. High-dollar debtors will face increasing financial risks.

Contact

Dr. Wolfgang Eichert
Senior Manager
Research, Industrial and Economic Policy
BDI e.V.

+3227921014
+3227921037