Board predicts modest expansion worldwide
The US is likely to experience modest economic growth in 2017 while China will see just about the same level of growth it had this year as the world economy remains on a slow expansion track, according to forecasts from The Conference Board.
Geopolitical tensions, policy uncertainty, market volatility, and rapid changes in technology will pin the world economy to a slow-growth path, the board’s Global Economic Outlook 2017 said Wednesday. The New York-based organization describes itself as a nonprofit, independent business membership and research association that is more than 100 years old and works in the public interest.
“It is now undeniable that the global economy is stagnant,” said Bart van Ark, the board’s chief economist.
The report projects world gross domestic product (GDP) will advance 2.8 percent next year, up slightly from the anticipated 2.5 percent in 2016. The US economy should expand at a 2 percent rate in 2017 compared to 1.6 percent this year.
For China, the board uses a methodology that is different from the results produced by China’s National Bureau of Statistics (NBS) to determine mainland GDP, according to Erik Lundh, the board’s China economist.
“We use a methodology based on the work of Harry X. Wu (of Japan’s Hitotsubashi University) to develop alternative growth and productivity estimates for China that is based more on supply factors,” he said.
The reports said that the Chinese economy will grow 3.8 percent in 2017, down slightly from 3.9 percent in 2016. The Chinese government aims for annual GDP growth of about 6.5 percent using the NBS’s methodology.
Jing Sima, a senior economist with the board, said China is making progress on restructuring its economy to emphasize services and consumption over manufacturing and exports which is producing slower growth in the industrial sector.
“So you have the industrial sector with less of a share because of the slowdown and not because it is policy driven,” Sima said.
Van Ark said the long-term trend in China is dominated by demographics (an aging society) and a slowdown in investment.
Lundh said it’s simply too early to get a read on the impact of an administration of President Donald Trump will do.
“I don’t think many people know what this means. It’s a question mark that we hope to better understand over the next few months,” he said.
Van Ark said the key elements for Trump are the first 100 days in office and what will happen after that. Trump plans to reportedly sharply increase infrastructure spending in the US.
“We have a tightening labor market and one question is are the workers there to build and remodel the infrastructure,” said van Ark.
TCB said it is a nonprofit, independent business membership and research association working in the public interest and is over 100 years old.