Global Outlook Continues Improving

from the Dallas Fed

— this post authored by Kelvinder Virdi

World gross domestic product (GDP) edged up in the second quarter, thanks to improvement in both advanced and emerging economies. World real (inflation-adjusted) GDP (excluding the U.S.) rose 0.4 percentage points to 3.5 percent on a year-over-year basis (Chart 1).

Advanced economies (excluding the U.S.) saw 2.6 percent growth, compared with 2.0 percent in the first quarter, while emerging economies saw 4.6 percent growth, up from 4.4 percent.

Notable Second-Quarter Performance

Canada, the Netherlands and France contributed to the advanced economies’ performance. Canadian GDP growth increased from 2.3 percent in the first quarter to 3.7 percent in the second quarter, while the Netherlands moved up from 2.6 percent to 3.8 percent and France from 1.1 percent to 1.8 percent.

The greatest changes among emerging economies were in Mexico, Russia and India. GDP growth increased from 2.6 percent to 3.0 percent in Mexico and from 0.5 percent to 2.4 percent in Russia. India’s growth rate decreased, from 6.1 percent to 5.6 percent.

The most recent biannual World Economic Outlook from the International Monetary Fund (IMF) was released in October. Aggregate world real GDP (excluding the U.S.) is forecast to grow 3.2 percent in 2017 and 2.9 percent in 2018, up from 2.8 percent in 2016. The IMF growth calculations were created by aggregating IMF forecasts using U.S. bilateral trade weights.

Aggregate Inflation Unchanged

Inflationary pressures have largely remained muted. World CPI inflation (excluding the U.S. and Venezuela) during September was unchanged from August at 2.7 percent year over year (Chart 2).[1]

Among advanced economies, Canada’s year-over-year consumer price index (CPI) inflation rose to 1.6 percent in September from 1.4 in August, while Germany’s CPI advanced to 1.9 percent from 1.8. South Korea’s inflation fell to 2.1 percent from 2.6 percent.