World Economy Gaining Momentum, Risks Remain High: DIW Economic Outlook

Abstract

The world economy continues on its upward growth path, with global production expected to grow by 3.7 percent this year and slightly more than that in 2018. The economies in both the developed and the emerging countries are gaining momentum. Solid output growth is expected for the U.S. and euro area over the forecast period; China’s growth rates remain high, though they are declining somewhat; and Russia is coming out of its recession. Private consumption is driving growth in the developed countries, but the rise in inflation – which is due to higher energy prices – is expected to slow down consumption growth a bit. The global increase in prices is likely to also lead to a slightly more restrictive monetary policy overall. A number of economic policy-related risks – not least among them, the protectionism – could have a negative impact on the world economy, in particular on investment activity.