The world economy is on the verge of growth and expansion. This projection is by the International Monetary Fund (IMF) in its World Economic Outlook (WEO) report released ahead of April 2018 Spring Meetings currently ongoing in Washington, D.C.
The IMF retained its 2018 and 2019 global growth forecasts at 3.9% apiece, 10bps above actual growth of 3.8% in first quarter of 2017.
According to the IMF, the growth is expected to remain broad-based across regions, extending the synchronised expansion observed since 2017 against the backdrop of favorable market sentiment, accommodative financial conditions and positive knock-on effects of expansionary fiscal policy in the United Sates.
In the forecast years, Advanced Economies (AEs) are expected to grow faster than potential while excess capacity is expected to narrow in the Euro Area. Similarly, growth in Emerging Markets (EMs) & Developing Markets (DMs) is expected to strengthen further, following the rebound in global trade and rising commodity prices.
Stripping global growth by regions, AEs are projected to grow higher than initial forecast in 2018 (revised to 2.5% in 2018 vs. actual of 2.3% in 2017), driven by stronger activity in the US and Euro Area which would offset the slower growth in the UK, Japan and Canada.
Positive US outlook is on the back of expansionary fiscal policy, while the sustained recovery in the euro area is anchored on stronger domestic demand, supportive monetary policy and improved external demand prospects.
In EMs & DCs, growth is projected to accelerate 10bps to 4.9%, driven by improved external demand outlook in China, strong private consumption in India and Brazil as well as Mexico which will feed off positive growth in the US.
The IMF is also optimistic on Sub-Saharan Africa as it estimated growth in the region to improve from 2.8% in 2017 to 3.4% in 2018 (previous estimate: 3.3%), largely on the back of growth prospects in key economies – South Africa, Angola and Nigeria.
The world body’s projection ties in with Afrinvest Research projection, which shows a more optimistic outlook with projected growth of 2.6% to be driven both by oil and non-oil sectors in 2018.
In the global commodities market, oil prices rallied further to US$73.82 (as at 20th April, 2018) – a 3 year high – following indications that oil inventory surplus which was in excess of 337.0m barrels in January 2017 had been cut by approximately 97.0% to 10.0m barrels by January 2018 as a result of oil production cuts agreed upon by member countries of the Organization of Petroleum Exporting Countries (OPEC) and its allies led by Russia since December 2016.
Across African markets tracked, it was observed that a mixed performance as 2 of 4 indices under coverage closed in the green. Ghana’s GSE Composite and Egypt’s EGX rose 2.8% and 0.9% W-o-W respectively.
During the week, Egypt reported a decline in inflation rate to 13.0% following removal of subsidies and floating of its exchange rate in the previous year while investors in Ghana continue to increase positions in local stocks. On the flipside, Kenya’s NSE 20 sustained negative performance from the prior week further declining 2.5% W-o-W while the Nigeria’s All Share Index fell marginally by 0.3% as investors continued to book profits on overvalued stocks.
Source: The Nation
Oral Ofori is Founder and Publisher at www.TheAfricanDream.net, a digital storyteller and producer, and also an information and research consultant.