The Year in Review: Global Economy in 5 Charts

IMF Blog, December 18, 2017

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2017 was marked by natural disasters, geopolitical tensions, and deep political divisions in many countries.
On the economic front, 2017 is ending "on a high note," with GDP continuing to accelerate over much of the world in the broadest cyclical upswing since the start of the decade.
The page presents five charts that summarize key aspects of the year's economic developments.

Growth accelerated in about three quarters of countries—the highest share since 2010.
Several countries with previously high unemployment, including some in the euro area, participated in the growth surge and experienced strong employment growth.
Some large emerging market economies, such as Argentina, Brazil, and Russia, exited their recessions.
In per capita terms:
- Growth in almost half of emerging market and developing economies lagged behind advanced economies.
- Almost a quarter of emerging market and developing economies have seen declines.
Countries that struggled included fuel exporters and low-income economies suffering from civil strife or natural disasters.

Global trade growth rebounded from its slowest pace since 2001, other than during the recession of 2009.
The rebound was boosted by a recovery in investment.
Weak capital spending in the energy sector had been an important contributor to the weakness in global investment in 2016.

Metal and fuel prices were supported by stronger momentum in global demand and supply restraints in the energy sector.
Specific supply disruptions included hurricane-related stoppages in the United States, financial disruptions in Venezuela, and security problems in regions of Iraq.
Futures prices indicated general stability or some moderation in prices going forward.
Policy implication: Commodity exporters need to continue adjustment to lower revenues and diversify production and export mixes to build resilience and support future growth.

Wage growth has remained puzzlingly tepid in advanced economies despite falling unemployment rates.
Contributing factors include:
- Continued slack in labor markets (still high unemployment in some countries or high levels of involuntary part-time unemployment).
- Weak productivity growth.

Equity valuations have continued their ascent and are near record highs.
Central banks maintained accommodative monetary policy settings amid weak inflation.
Low interest rates, an improved economic outlook, and increased risk appetite boosted asset prices and suppressed volatility (as measured by the VIX).
While easier financial conditions bolstered growth momentum, they also pose risks if the search for yield extends too far.

"Don’t let a good recovery go to waste."
Policymakers should not be lulled into complacency by the current recovery; good times are most likely temporary.
To ensure a more durable recovery, policymakers must seize the opportunity for reform.

Source: The Year in Review: Global Economy in 5 Charts — Oya Celasun, Gian Maria Milesi-Ferretti, Maurice Obstfeld, December 18, 2017.

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