The current world economy- truth or fiction
The current world economy is projected to carry forward its current momentum to generate a 3 percent growth rate in 2018.
The potential for much faster growth is limited by a number of factors however.
What could sustain growth in the current world economy?
- An improvement in labour force skills
- Stronger productivity growth
Major emerging economies are unlikely to return to growth trends of the past.
China and the United States of America are set to dominate digital technology, which is likely to lead to a higher demand for imports from these countries. With the expansion of consumer markets, like in regions such as Sub-Saharan Africa, more imports are likely. The boom in the demand for smart devices across Africa is also likely to lead to a greater demand for digital technology products from these Economic Super Powers.
Automation is set to sustain and even accelerate change on the demand side of labour markets. A automation becomes standardised in various sectors, the labour force faces a threat, which may lead to increased unemployment.
Emerging markets will continue to gain some strength in 2018. According to the World Bank, growth in emerging market and developing economies as a whole is projected to strengthen to 4.5 percent in 2018.
A slowdown in consumption growth is possible in several countries. This is likely to have an effect on exporting countries in different ways.
Oil prices are likely to remain firm, which may also lead to fuel price stability in some regions.
Corporate investment may become a more prominent growth driver in 2018. Corporate investment will be needed in order to improve employment opportunities. Further investment in infrastructure may also factor into improved productivity levels across various sectors, leading to potential growth in the current world economy.