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Optimism Surrounds Global Economy in 2017 | ASHARQ AL-AWSAT English Archive 2005 -2017
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IMF Managing Director Christine Lagarde.(REUTERS)

Cairo – Experts and observers expect the biggest economies of the world to see an escalating, or at least a stable, growth in 2017. The tough economic situation that dominated the world over the past six years is about to end, and more recovery and prosperity are on the road, according to a notable international institution.

Since the global financial crisis of 2008, the growth of economy slowed down in an attempt to overcome the crisis which paralyzed the international economy with its repercussions from the United States in the west to China in the east.

Christine Lagarde, the managing director for the International Monetary Fund (IMF), said during a speech in Berlin that even the slow economic development saw a major obstruction driven by a global recession in 2011, which resulted in low and disappointing growth rates over six years.

With the spreading geopolitical tensions worldwide, whether in the Middle East which witnessed many conflicts, or with the growing terror attacks in different regions including Europe, there was a major concern of an additional decline in growth this year.

However, recent figures and forecasts were brimming with optimism on the growth of economy, especially if economies’ leaders avoided obvious obstacles including the political uncertainty, the protectionism and its dangers on the global trade, and the aggravation of bad financial global conditions that may cause the fleeing of important capitals from the developing economies.

The Arab Economic Growth is Promising

Lagarde expected the emerging and developing markets to contribute in around 75% of the global GDP in 2017. Last week, a report issued by the Arab Monetary Fund stated that the growth in Arab oil exporting countries will hit 2.3% – driven by the resumption of previous production paces of oil and the continuous increase in its global prices.

The report also expected a recovery in the Arab countries’ economies with a 2.7% growth rate in 2018.

The report also stated that the expected improvement in the economic growth in 2018 covers GCC countries and other oil exporting countries. It also said that growth rate in these countries will hit 4.1% steered by the increasing foreign demand owing to the improvement of the global economic activity, which will support the levels of exports and investments.

As per the inflation-related forecasts for 2017-2018, the report noted that rates will be affected by many local factors like keeping on measures aiming to rationalize support, applying the value-added-tax (VAT), and adopting new taxes such as the selective tax. The report also stated that the inflation rate in the Arabian countries will reach 9.8% in 2017, and around 9.6% in 2018.

The International Trade Recovers

In the meantime, the World Trade Organization (WTO) expects the international trade to grow by 2.4% in 2017 – but it urged from a deep uncertainty concerning the economic and political developments, especially in the United States.

WTO’s Director-General Roberto Azevêdo sees that optimism is cautious, but considered that the trade’s growth is still fragile, and the regression’s prospects are high.

China is Stable

As per the second biggest economy in the world, experts expect the growth of the Chinese economy to maintain stability in the first quarter of 2017 due to the governmental expenditure and the exports’ recovery. They also forecast the Chinese GDP for 2017’s first quarter to settle on 6.8% – recorded in 2016’s final quarter.

In a report published earlier this week, the World Bank said the growth in the China will keep declining to 6.5% in 2017, and to 6.3% within the two coming years.

Reassuring Growth in the Eurozone

In the Eurozone where is are deep political threats, Chief European Economist at Capital Economics Jennifer Mcqueen said economy in the region is expected to grow remarkably in 2017 despite the low industrial product.

An economic survey published by the Centre for European Economic Research (ZEW) in Mannheim, Germany, showed that investors’ trust in Germany leaped in April for the second month in a row, and reached its highest level since 20 months.

At the same time, the economic data of Germany and France, considered the two biggest economies in the Eurozone, showed that the huge growth in the construction sector compensated the slowness dominating the industrial product.

The Purchasing Managers Index (PMI) in the zone pointed to an improved growth in the sector of services too.

According to Mcqueen, the Eurozone’s GDP will grow by 0.4% in Q1 2017, and 2% at the end of this year.