The International Monetary Fund has lowered its global outlook for the 2016-2017 year, despite a fairly strong performance during 2016. The U.K.’s vote to leave the European Union has led to uncertainty macro economically and may lead to a negative impact due to damaging investor confidence and market sentiment. The IMF is projecting that the advanced economies will hold steady with growth at 1.8% for both 2016 and 2017, and the overall global growth is projected to increase by 3.1% in 2016, 3.4% in 2017.
Currently, the emerging market and developing economies are forecast to grow 4.1% in 2016 and 4.6% in 2017. Between 2014 and 2016, many emerging markets have faced declining economic performance for several reasons. Former rapidly expanding countries, Brazil and Russia are currently in a recession, and China’s economy has slowed due to the rebalancing of its economic growth model. India is one of the few emerging market countries from 2014 that has rapidly growing, as it is likely benefiting from the lower commodity prices because it is a net importer, and business-friendly policies being placed by the current government. Nigeria, South Africa, and Angola have some the strongest potential for economic growth in the coming years, and Africa has been the fastest growing global region over the past decade. The decline in the commodity prices globally has raised awareness of an economy’s need to have strong diversified sectors that can fuel future economic growth.
Companies must be aware of these changes in the global economy, especially when looking to expand or move operations. Make sure to check back with the globalEDGE blog for parts 4 and 5 of our Mega Trends blog series!