Global Outlook 2018: Dangerous waters ahead for the world economy

The Dow Jones Industrial Average, 2000-2018
The U.S.’s Dow Jones Industrial Average has soared to all-time highs in the past few years, but asset prices do not match productivity (source: macpixxel for GIS)
  • High levels of debt-fueled liquidity are powering the global economy
  • Productivity does not match the levels of investment
  • When interest rates rise and investors pull back, it could cause a crisis

Will it be smooth sailing for the global economy in 2018? At a first glance, it seems so. Finally, the world’s regional economies all seem to be in sync. Financial markets are soaring. Consumer spending is on the rise. Companies are buying back their own shares. However, beneath the surface, dangerous currents are converging. For the moment, the wind is in the world economy’s sails. The International Monetary Fund (IMF) estimates worldwide gross domestic product (GDP) growth for 2017 at about 3.6 percent. For 2018, the forecast is 3.7 percent. These rates are only slightly below the global average ahead of the 2008 crisis. Other data are positive, too. Consumer confidence keeps mounting, and there is more private investment.

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