Global Growth Little Changed Despite Heightened Policy Uncertainty

from the Dallas Fed

— this post authored by Kelvinder Virdi

Global real gross domestic product (GDP) growth decreased from 3.5 percent on a year-over-year basis in third quarter 2017 to 3.4 percent in fourth quarter 2017.[ 1] Risks to the global outlook remain tilted to the downside as trade policy changes and the specter of protectionism pose restraints on trade and growth. Geopolitical risks also persist and are an additional source of downside risk.

Emerging Economies Slightly Depress Global Growth

Growth among advanced economies was largely unchanged from third quarter 2017 to fourth quarter 2017 (Chart 1). Notable changes include real (inflation-adjusted) GDP expansion in South Korea, where the growth rate fell from 3.8 percent to 3.0 percent on a year-over-year basis; Canada, where it narrowed from 3.0 percent to 2.9 percent; and Switzerland, where it expanded from 1.2 percent to 1.9 percent.

Meanwhile, emerging economies’ growth rate slipped from 4.4 percent to 4.3 percent on a year-over-year basis. Notable changes include India, where real GDP increased from 6.4 percent to 7.3 percent; Mexico, where it narrowed from 1.7 percent to 1.5 percent; and China, where it slipped from 6.9 percent to 6.8 percent.

Initial CPI Data Suggest Lower Inflation in Emerging Economies

Year-over-year consumer price index (CPI) inflation in January 2018 was 2.6 percent globally and 1.6 percent in the advanced nations (Chart 2). Not enough inflation data have been released to broadly assess CPI activity in February. Based on available February data, CPI inflation increased from 1.0 percent to 1.4 percent year over year in Korea; it decreased from 1.6 percent to 1.3 percent in Germany and from 1.8 percent to 1.4 percent in Taiwan.

Year-over-year CPI inflation in emerging countries, for which more recent data are available, decreased during the January-to-February period from 3.8 percent to 3.7 percent.[2] Notable changes include India, where inflation fell from 5.0 percent to 4.4 percent; Mexico, where it fell from 5.5 percent to 5.3 percent; and China, where it rose from 1.9 percent to 2.1 percent.