Dubai – A new report released by the Arab Strategy Forum said that a number of local drivers would stall reforms across the world’s major economies.
The Arab Strategy Forum was launched in 2001 under the patronage of Sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, as a platform to foresee the future and identify potential economic and political trends globally and across the Arab world.
The ninth session of the Arab Strategy Forum opened in Dubai on Wednesday, with participation from leading global, regional and international thought leaders, decision-makers, academics, economists and political analysts.
The “State of the World in 2017” report issued by the Forum said that global growth for 2017 was not expected to exceed 4 per cent while trade was expected to be at around 3 per cent.
“A variety of local drivers will lead reform to stall across most of the world’s major economies, thereby depressing both individual and aggregate growth prospects in 2017”, the report said.
It added that a lack of reform in emerging markets in particular will prevent any significant growth surprise, while the generalized slump in structural reform will weigh on global debt levels – already at their highest point since 2000, at over 225% of global GDP according to the International Monetary Fund.
Concerning trade activities, the report said that trade growth would not exceed 3%, remaining at or below expected global growth in 2017.
“A combination of structural factors and continued political pressures will prevent global trade from rebounding in 2017. This will prove problematic for global growth given trade’s decades-long role in driving growth”, the report added.
On the economic situation in Europe, the report noted that a major European banking crisis would send shockwaves into global markets.
“With European growth already projected to be lower in 2017 that in 2016 (at 1.4% according to the IMF), any financial slump would only aggravate the existing trend toward a prolonged period of slower growth in Europe, by consequence weighing on the global economy”, it said.
A financial shock within Europe would worsen lending conditions on the continent, in turn undermining an already-fragile recovery, according to the report.
On the situation of oil, the report noted that the production cuts announced by OPEC on 30 November would result in total OPEC production falling to around 33.0 million bpd.
“This will put a solid floor under prices, which will probably hover in the lower half of the $50s per barrel in 1H 2017, rising further in the second half but averaging under $60 for the year”, it stated.