Global eco­nomic up­turn, but threat is pro­tec­tion­ism

The Star Late Edition - - BUSINESS REPORT - Reuters

THE GLOBAL econ­omy is in a broad-based up­turn with core in­fla­tion at last on the rise, ac­cord­ing to a ma­jor­ity of econ­o­mists polled, but the world­wide gains re­main un­der threat from trade pro­tec­tion­ism.

Those find­ings come as the semi-an­nual gathering of fi­nance of­fi­cials from the In­ter­na­tional Mon­e­tary Fund (IMF), the World Bank and the Group of 20 ma­jor economies kicks off in Wash­ing­ton, where the case against pro­tec­tion­ist trade poli­cies is ex­pected to be a ma­jor theme.

Re­cent op­ti­mism on the global econ­omy found in the poll is based on man­u­fac­tur­ing and trade gains in some ma­jor economies and is in line with the IMF’s up­graded pro­jec­tions in its lat­est quar­terly World Eco­nomic Outlook.

“For the first time in five years, all the ma­jor economies seem to be grow­ing in sync,” noted Ajay Ra­jad­hyak­sha, head of macro re­search at Bar­clays.

“The global trade re­ces­sion is over, fears of de­fla­tion have faded even as in­fla­tion pres­sures seem muted and the worst fears on global trade – such as the US im­pos­ing tar­iffs on ma­jor trad­ing part­ners – have not come to pass.”

The polls of more than 500 econ­o­mists across Asia, Europe and the Amer­i­cas, how­ever, sug­gested that con­cern re­mains about trade na­tion­al­ism.

But on the econ­omy as a whole, it re­vealed up­grades, or no change to growth fore­casts com­pared with pre­vi­ous months, as well as a slightly stronger in­fla­tion outlook across most coun­tries.

Global growth is fore­cast to rise to 3.4 per­cent this year, fol­lowed by 3.5 per­cent next – back above the pace it was ex­pand­ing at be­fore the fi­nan­cial cri­sis al­most a decade ago.

While the lat­est con­sen­sus was slightly lower than the IMF’s projection of 3.5 per­cent global growth in 2017, the range of fore­casts in the poll pointed to a slightly more op­ti­mistic outlook this time around, with higher highs. On track

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