Global growth expected to moderate at 3.1pc

GLOBAL economic growth is projected to remain moderate at 3.1 per cent this year, compared with last year’s 3.2 per cent.

The projected growth comes on the back of expected small expansion in advanced economies, at 1.6 per cent (over last year’s 2.1 per cent), and improvements in emerging markets and developing economies, at 4.2 per cent compared with last year’s four per cent, according to the Economic Report 2016/2017.

Among advanced economies, the United States is anticipated to register slower growth while the euro area will continue its moderate pace of growth, although Brexit continues to impact consumer and business confidence in the eurozone and the United Kingdom.

During the first half of this year, the US economy only grew 1.5 per cent (compared with January-June last year’s 3.2 per cent) mainly due to lower private investment and government spending.

The US is expected to register slower growth of 1.6 per cent this year (2015: 2.6 per cent).

The eurozone, meanwhile, recorded gross domestic product growth (GDP) of 1.7 per cent in the first half, underpinned by higher disposable income as a result of lower oil prices and better labour market conditions.

Germany and France both recorded 0.4 per cent higher gross domestic product (GDP) growth in the first half, at 1.8 and 1.4 per cent, compared with their January-June numbers of 1.4 and 1.0 per cent, respectively.

Japan is expected to record only marginal growth due to sluggish private consumption and the appreciation of yen.

The Japanese GDP grew 0.5 per cent (compared with 0.2 per cent for January-June last year) due to stagnant wages and a volatile equity market that had eroded consumer sentiment and business confidence.

The slow pace of growth in advanced economies is offset by emerging and developing economies like China, India and Asean countries.

China’s accommodative fiscal and monetary policies continue to support its rebalancing efforts towards more sustainable growth, with the services sector and consumption becoming its main economic drivers.

China registered growth of 6.7 per cent in the first half helped by robust investments in public infrastructure and a favourable housing market.

Its services sector also grew 7.5 per cent due to higher consumer spending on leisure, healthcare and information and communications technology services.

India registered higher growth of 7.5 per cent in the first half and it is expected to remain robust with increased private consumption and stronger services and agriculture sectors.

Among Asean countries, Malaysia, Indonesia, Thailand, the Philippines and Vietnam are expected to record steady expansion, driven mainly by higher infrastructure investment and consumption.

Overall, the Asean GDP is projected to grow 4.5 per cent this year (2015: 4.4 per cent) supported by private and public consumption and investment in infrastructure.