The short-term Outlook economic growth in developed countries has improved, despite the persistence of a number of factors of political uncertainty. This is stated in the review of the international Agency Fitch Ratings.
According to Fitch ratings, the economic growth in developed countries will accelerate to 1.9% in 2017 and 2% in 2018, compared with 1.6% in 2016. A leader in recovery, is expected to become the United States, while growth in the Eurozone and Japan to remain largely stable.
In developing countries economic growth in the current year will accelerate to 4.7 percent from just over 4% in 2015 and 2016, predicts Fitch. Strengthening economic recovery in developing countries will be achieved due to the return of Russia and Brazil to restrained the rise, says the review.
“Stability in labor markets and consumer spending, a more favorable fiscal policy and the stabilization of the markets of developing countries has helped developed countries to speed up growth in the second half of 2016,” – said the chief economist at Fitch’s Brian Coulton.
Moreover, he added that a simultaneous improvement of surveys of representatives of the productive sector in developed countries suggests that the momentum will continue into early 2017.
The expected improvement in prospects for economic recovery in developed countries, according to him, is associated mainly with the forecast faster than previously expected, easing fiscal policy in the USA, and also with the possibility that it will provoke the activation of private investment in the country.
The expert warns about the persistence of serious risksthat could reduce these trends.
So, aggressive protectionist approach to trade policy the new US administration may lead to retaliation, and global currency volatility that will jeopardize business confidence in the economy, says the review.
In the long term, if the United States switched to the model trade restrictions with the objective of sustainable reduction in the trade deficit, it is difficult to imagine who can replace them and fill the gap in global demand, experts say.
In the Euro area the emergence of concerns of fragmentation of the currency bloc could lead to tighter credit conditions and significantly slow economic growth.
According to Fitch ratings, the Federal reserve (fed) will raise the benchmark interest rate three times in 2017 (in November it was expected to improve only two), and a total of seven times in 2017-2018.
The European Central Bank (ECB) is committed to provide additional stimulus in the current environment, however, the leadership of the Central Bank will be faced with increasing challenges when dealing with the markets, given the acceleration of inflation noted in the review.
Fitch does not expect the Bank of Japanholding its Deposit rate at minus 0.1 percent, lowered it even lower.
Agency experts also note the presence of signals policy shift in China. After the success of stimulus measures introduced from late 2015 to support growth, the Chinese authorities have shifted attention to the problem of perekreditovanija economy, says the review.
“The reduction in key interest rates in China in 2017, which we predicted earlier, no longer seems possible,” – noted analysts at Fitch.
According to them, changing the focus policy of the Chinese authorities occurred a little earlier than expected, which will probably lead to some weakening of economic growth in China this year. According to Fitch ratings, China’s GDP will grow in 2017 6.3%.