Forecast of Macroeconomic Development

Future General Conditions

In its January 2017 World Economic Outlook Update, the International Monetary Fund (IMF) predicts that gross domestic product (GDP) in Germany will grow 1.5% in the current fiscal year. One reason for the lower growth is that there are fewer working days compared with 2016; another is the anticipated smaller increase in government spending than in the previous year. The IMF expects the eurozone’s GDP to grow by 1.6% in 2017 and the upturn in domestic demand to continue in 2017.

For the U.S.A., the IMF forecasts a sharp increase in GDP growth to initially 2.3% this year. Depending on the actual scope of the fiscal policy measures announced by the new government, this forecast is likely to change during the course of the year. Above all, economic activity could be curbed in 2017 by a further appreciation of the U.S. dollar and the announced interest rate hikes by the U.S. Federal Reserve (Fed).

The IMF expects Japan’s moderate growth to continue and forecasts GDP growth of 0.8%. The negative interest rates as well as increasing private incomes and government spending continue to have a positive effect.

According to the IMF, emerging and developing economies are expected to record GDP growth of 4.5% in 2017. The IMF sees India, whose economy is forecast to grow 7.2%, and China, with GDP growth of 6.5%, as the main growth drivers here. After the recessions in Russia and Brazil curbed the growth of the emerging and developing economies in 2016, this effect will be much smaller in 2017 due to the stabilization of the economic situation in these two economies. The IMF expects Russia’s GDP to grow by 1.1% and Brazil’s to increase slightly by 0.2% in 2017.

Based upon these estimates, the IMF forecasts an increase in growth of 0.3 percentage points to 3.4% for the global economy in 2017.

The IMF sees considerable risks in an increase in political discord in many countries. In addition, the growing tendency toward protectionism in many places could have a negative effect on international trade and the global economy. Furthermore, the IMF continues to see a risk of slower growth in advanced economies and a risk of turbulence on financial markets resulting from new bank crises in heavily indebted countries. According to the IMF, geopolitical tensions in various countries are noticeably slowing down the economic development of these countries.

In 2017, the IMF primarily sees opportunities in stronger-than-expected fiscal policy measures in the U.S.A. and/or China with corresponding positive effects on their primary trading partners.

Year-on-year economic growth (GDP) forecast for 2017

Year-on-year economic growth (GDP) forecast for 2017