Global growth: Signals do not reassure

The IMF anticipates a 3.9% growth for the world economy for 2018-2019, but its experts show that an unfavorable external situation, such as that created by growing trade tensions with the United States, can harm economic expansion

In his meeting with Chinese Premier Li Keqiang, European Council President Donald Tusk called on Beijing to avoid the chaos of a trade war, in response to US President Donald Trump who called the European Union (EU), China, and Russia enemies. "This statement comes as yesterday, Monday, July 16, 2018, the first bilateral meeting between Donald Trump and his Russian counterpart Vladimir Putin in Helsinki (see also page 30)
After having already imposed tariffs on $ 34 billion of Chinese products, US last week announced additional taxes on $ 200 billion of Chinese imports, which will be applied as early as September. China had immediately warned that it would retaliate in such a case. The Chinese Ministry of Commerce said it added these new US threats to the ongoing WTO case against Washington.
For many institutions (Brussels, IMF, OECD …), trade tensions could bring down current forecasts. In its interim economic outlook for the summer of 2018, the European Commission reports resilient growth against a backdrop of heightened uncertainty. It is expected to remain strong in 2018 and 2019, reaching 2.1% this year and 2% next year, both in the EU and the euro area. However, after five consecutive quarters of strong growth, the economy slowed down in the first half of 2018 and projections for both the EU and the euro area were revised down by 0.2 percentage points in spring. "Growth in Europe should remain resilient, as monetary policies remain accommodative and unemployment continues to fall. The slight downward revision from spring reflects the impact of trade tensions and political uncertainty on confidence and rising energy prices, "said Pierre Moscovici, Commissioner for Economic and Financial Affairs, taxation and customs. "Our forecasts call for further expansion in 2018 and 2019, although there is clearly a downside risk in the event of a further escalation of protectionist measures. No one comes out victorious in a trade war: it only causes losses, "he adds.
Growth momentum is expected to strengthen slightly in the second half of this year. This is due to the improving job market, reduced household indebtedness, continued strong consumer confidence and accommodative monetary policy.
The IMF has repeatedly warned that any protectionist temptation threatens the economic upturn. In its update of the outlook for the global economy (published on July 16, 2018), the Fund expects a growth rate of 3.9% in 2018 and 2019. This is in line with the outlook for April 2018, but the expansion becomes less regular and the risks are higher and higher. The forecasts conceal large disparities since the Fund has lowered that of advanced countries including Japan, Germany, France, Italy and the United Kingdom. For the moment, the projection of growth of the first two economies in the world, the United States and China, remains unchanged for this year. The IMF team recommends avoiding protectionist measures and especially finding a cooperative solution that promotes the growth of trade in goods and services. As it is necessary to adopt reforms. Countries that do not have a fiscal margin need to make one. On the backdrop of financial market volatility, it is also imperative to ensure financial resilience.

MOANAP region: Good predictions, but …

The oil-exporting countries of the Middle East region, the North Africa, Afghanistan and Pakistan (MENAP) have benefited from improved oil prices, but the outlook for the importing countries remains fragile, the IMF predicts. It projected 1.9% growth for the Saudi economy in 2018, up 0.2% from its latest projection in April. Several economies still face significant fiscal consolidation needs, and the threat of even greater geopolitical conflict continues to weigh on growth in the region. It should increase from 2.2% in 2017 to 3.5% in 2018 and 3.9% in 2019. As a reminder, the Annual Meetings of the World Bank Group and the International Monetary Fund will be held at Marrakech in October 2021. Last year, the growth of the Moroccan economy stood at 4.4% and is expected to slow to 3.1% in 2018. In the medium term (by 2022), it should at 4.5%, based on recent projections.