The International Monetary Fund conducts its semi-annual health check of the world economy this week with investors fretting global growth is starting to sag after accelerating the most since 2011 last year.
Despite the soft start to the year and ongoing trade tensions, economists on Wall Street and beyond are sticking to forecasts for another solid economic expansion in 2018 while acknowledging the risks of slippage have mounted.
Here’s a rundown of what economists at major banks are saying in reports and interviews about the outlook. The forecasts are for global output in 2018 and are mostly in terms of purchasing power parity, the metric favored by the IMF which currently anticipates an expansion of 3.9 percent.
Goldman Sachs Group Inc. (4.1 percent)
There have been negative surprises, but we’re not that overly concerned. The bottom line is that the global growth numbers have moderated, but we’re not rolling over as much as some of the data suggest.-- Jari Stehn, economist, April 3.
Morgan Stanley (3.9 percent)
Developed market growth has moderated alongside the rising risk of protectionism, renewing concerns over the length of the global expansion. The more critical debate, in my view, is how long the business cycle has to run. The end does not seem near.
The most important risk to the business cycle in our view is the potential stress in U.S. corporate balance sheets, particularly in the context of a further rise in real rates. Hence, we recommend that you keep your seat belts fastened.-- Chetan Ahya, global co-head of economics, April 8
UniCredit Group (3.9 percent)
While the global economy still looks robust, a number of indicators have eased off their peak these past couple of weeks. So far, it’s nothing to worry about, but the overwhelming probability is that the global economic expansion is not accelerating anymore, which means -- virtually by definition -- that the risk of lower global growth has increased.
If you now combine this quite natural change in the risk profile for global growth with the possible effects on trade, business sentiment and growth more broadly of these most recent unfortunate turns in global politics, you have to worry about the growth trajectory, including about the possibility of a significant slowdown. I suggest you fasten your seatbelts.-- Erik Nielsen, group chief economist, April 8
Citigroup Inc. (3.4 percent at current exchange rates)
Recent growth and inflation data seem to have undershot expectations. Recent developments have sharpened our risk outlook. We continue to see small upside risks to our 2018 growth, inflation, and monetary policy forecasts; but downside risks have risen. This is largely the result of growing geopolitical risk, and the increasing importance of the weak dollar to global (and especially emerging market) growth.-- Willem Buiter, special economic adviser, March 26
HSBC Holdings Plc (3.9 percent)
The global synchronized recovery looks set to continue in 2018. Global growth is very robust by post-crisis standards, all regions of the world are participating in a synchronized upturn and unemployment is falling more or less everywhere.