Global Economy Watch

PwC's Macroeconomics team presents the Global Economy Watch, a short publication that looks at the trends and issues that are affecting the global economy and details our latest economic projections for the leading economies of the world.

In our final GEW of the year, we outline key themes we think could prevail in the global economy in 2018

1. Global economic growth on track to be the fastest since 2011: In our main scenario, we project the global economy will grow by almost 4% in purchasing power parity (PPP) terms, its fastest since 2011, adding an extra $5 trillion to global output in current value terms. More importantly, we expect growth to be broad based and synchronised, rather than dependent on a few countries. The main engines of the global economy - the US, emerging Asia and the Eurozone, which comprised 60% of world GDP in 2017 - are expected to contribute almost 70% of economic growth in 2017 in PPP terms compared to their post-2000 average of around 60%.

2. The beginning of the end of easy money: Since the Federal Reserve started to gradually reduce the size of its balance sheet and raise rates, the question has been who will follow next. We expect the European Central Bank (ECB) to further reduce its monthly asset purchases in 2018. If Eurozone inflation rebounds faster than our baseline projection, 2018 could see the end of the ECB’s asset purchase programme. In Japan, however, we don’t think there will be a dramatic shift in monetary policy. Generally, we expect monetary policy to somewhat tighten in the G7, reflecting closing output gaps in some advanced economies and stable inflation expectations.

3. Global economy biggest, most energy hungry ever: The global economy is on course to consume almost 600 quadrillion British Thermal Units (BTUs) of energy—double its 1980 level and the highest level on record. We expect India and China together will consume about 30% of global energy, which will be about six times more than what the African continent will consume. Reflecting the slow shift towards renewables, 10% of global energy consumption is expected to be in renewables with China consuming twice as much renewable energy as the US.

Predictions for 2018 - Let the good times roll

Economist James Loughridge gives a 60 second update on economic predictions for 2018.

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Barret Kupelian
Senior Economist
Tel: +44 (0)20 7213 1579
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James Loughridge
Economist
Tel: +44 (0)78 0266 0106
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