## World Developments and Outlook

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**Canonical URL:** [World Developments and Outlook](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2017/october/menap/4-world-developments-and-outlook.pdf)

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### Global growth outlook
- The global upswing in economic activity remains on track, confirming the April 2017 World Economic Outlook findings.
- Global growth has been marginally revised up to 3.6 percent for 2017 and 3.7 percent for 2018, reflecting a steady improvement over the 2016 growth rate of 3.2 percent.
- Country-level revisions:
  - The forecast for the United States has been revised downward relative to the April 2017 World Economic Outlook.
  - Projected growth in the euro area revised upward by 0.4 percentage point in 2017 and 0.3 percentage point in 2018, supported by strong private consumption and investment.
  - Growth in China revised upward by 0.2 percentage point in 2017 and 0.3 percentage point in 2018, reflecting stronger growth in H1 2017 and an expectation of an expansionary policy mix.
  - The growth outlook for Russia revised upward by 0.4 and 0.2 percentage point in 2017 and 2018, respectively, helped by stabilizing oil prices, easing financial conditions, and improved confidence.
- Over the medium term, global growth momentum is expected to soften as output gaps close and demographic factors restrain potential growth.

### Trade and commodity prices
- Global trade:
  - Global trade growth moderated in Q2 after vigorous expansion in Q1, but momentum remains positive.
  - Global trade growth is projected to rebound to about 4 percent in 2017 and remain about 1 percentage point higher than GDP growth into the medium term.
- Commodities:
  - Oil is currently trading between $50–$60 a barrel and is expected to hover around these levels into the medium term.
  - Non–fuel commodities are projected to strengthen in 2017 and 2018 relative to their 2016 averages.
  - Commodity prices are expected to rise slightly, by approximately 1 percent a year between 2019 and 2022.
- Implication: Improved global growth and trade represent an important window of opportunity, and some countries will benefit from higher non–fuel commodity prices, but the sustained low oil price environment will continue to weigh on MENAP and CCA prospects.

### Financial conditions and market sentiment
- Market sentiment has continued to be strong and volatility low, even as expectations of US fiscal easing have dimmed.
- Capital flows to emerging market economies have remained resilient in recent months, continuing their recovery after the sharp decline in late 2015 and early 2016.
- With expectations of a more gradual pace of monetary policy normalization:
  - US long-term interest rates have declined by around 20 basis points.
  - The dollar has depreciated.
  - These developments should ease some fiscal vulnerabilities for countries across the MENAP and CCA regions.

### Risks to the outlook
- Short-term risks are broadly balanced:
  - Positive risk: stronger-than-expected recovery.
  - Negative risk: policy missteps amid high policy uncertainty and geopolitical tensions.
- Medium-term risks are tilted to the downside and include:
  - A shift toward inward-looking policies in advanced economies.
  - A more rapid tightening of global financial conditions, including faster-than-anticipated monetary policy normalization in the United States (which would likely be associated with a US dollar appreciation).
  - Noneconomic factors: geopolitical tensions, domestic political discord, weak governance and corruption, extreme weather events, terrorism and security concerns.
- These risks are interconnected and can be mutually reinforcing.
- Exposure: Countries in the MENAP and CCA regions are particularly exposed to risks related to key trading partners, global trade prospects, tightening global financial conditions and a stronger US dollar, and any increase in regional security and political tensions.

### Key statistics (Real GDP Growth, 2016–22)
- World: 3.2 3.6 3.7 3.7
- Euro Area: 1.8 2.1 1.9 1.6
- United States: 1.5 2.2 2.3 1.8
- China: 6.7 6.8 6.5 6.1
- Russia: –0.2 1.8 1.6 1.5
- MENAP: 5.0 2.6 3.5 3.7
- MENAP oil exporters: 5.6 1.7 3.0 2.8
- of which: non-oil GDP growth: 1.1 2.6 2.5 3.4
- MENAP oil importers: 3.6 4.3 4.4 5.3
- CCA: 2.5 3.6 3.7 4.3
- CCA oil and gas exporters: 2.4 3.5 3.7 4.3
- of which: non-oil GDP growth: 1.7 2.4 3.0 4.0
- CCA oil and gas importers: 3.3 3.9 3.8 4.4

*Source: IMF staff calculations and national authorities.*

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_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2017/october/menap/4-world-developments-and-outlook.pdf_