SYNCHRONIZED GLOBAL EXPANSION: World Economic Outlook Better Than Last Year.

• Author: Polzin, Paul E.
• Position: TRENDING

Almost all regions of the world are now growing. Global economic growth will be about 3.7 percent in 2018, and Goldman Sachs projects it will accelerate to 4 percent in 2019. Global economic conditions are important for Montana manufacturers because several prominent firms operate in the world market, and their exports depend on economic conditions worldwide.

Europe and the Eurozone--Hitting on All Cylinders

With the double-dip recession and debt crisis in the rearview mirror, the EU is projected to post consistent 2 percent real growth over the next few years. Almost all areas are experiencing positive growth, even countries such a Greece and Spain will grow at or above the EU average. The contribution of EU imports to global trade equaled that of the U.S. and China.

Germany remains the growth leader, with France lagging just a bit behind. Conversely, Italy is still saddled with political instability and a debt crisis. Unemployment remains high in certain countries, but it has begun to decline. Rates are still in the 15 to 20 percent range in places such as Greece and Spain but are down from the 25 to 28 percent reported four or five years ago.

The U.K. economy is decelerating, but the collapse predicted by some Brexit skeptics has not occurred. Real GDP growth is down from the 2.3 percent in 2015, but the drop was only to 1.5 percent in 2017. The forecasts for 2018 and 2019 are in the 1.4 to 1.6 percent range. Future Brexit and other trade negotiations are still uncertain and could become rancorous.

Hanging over the entire region is the potential for an energy crises. The unresolved situation between Russia and Ukraine could result in a sharp drop in energy supplies to Europe and a corresponding rise in prices.

South America--Finally Growth is Projected

The South American economy should continue to show modest growth. The Brazilian economy is now growing after several years of decline, while Venezuela's economy remains a basket case.

Brazil, the largest economy in South America, began to grow in early 2017 after eight consecutive quarters of decline. Brazil's inflation rate has moderated, but price stability remains a problem in other countries. For example, Argentina is projected to have an annual inflation of 13 percent per year for the next decade. Venezuela continues to be plagued by low oil prices, rampant inflation and political instability. The unrest there is spilling across the borders and impacting nearby countries.

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