These are the 15 biggest countries in terms of GDP plus the Euro Area and the European Union aggregates.
The IMF World Economic Outlook for April 2017 maintains a moderately positive outlook for global growth, and sets the forecast for expected global growth in 2017 and 2018 slightly above the levels forecasted in October last year, taking the estimates from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018. The expected pick up of economic activity should be stronger in emerging markets and developing economies, but “in line with stronger-than expected momentum in the second half of 2016, the forecast envisages a stronger rebound in advanced economies”. However, “risks remain skewed to the downside” and present uncertainties may still make this forecast reveal itself as too optimistic. Some of the downside risks include a possible shift to increasingly inward looking policies, a stronger-than-expected rise in interest rates, changes in financial regulations, the tightening of financial markets in emerging economies and numerous geopolitical factors.
The Gross Domestic Product of a country can be defined as the total monetary value of the goods and services produced within its borders in a year. GDP growth is expressed as a per cent. The average growth rate has been calculated using the geometric mean to obtain a ten-year equivalent rate.
The IMF biannual report stresses the importance of policy choices in reducing the risks, and it does so differentiating between economies that display a weak core inflation, where ¨cyclical demand support remains necessary¨, and economies where output is already close to its potential, in which ¨fiscal policy should aim at strengthening safety nets and increasing potential output¨. The IMF also stresses the importance for policymakers to avoid protectionist measures that could jeopardize global growth.
Among the major world economies, the fastest growing is still China, but the Asian giant keeps slowing down its pace, with a predicted 6.6% growth for 2017. Despite public efforts to sustain growth through credit easing and public investment, China is moving farther and farther away from the two digits growth of the first decade of the century. India, on the other hand, is expected to improve its growth rate to a 7.2%. That’s less than forecasted in October due to the short-term impact of the recent currency ban, but still a significant improvement that is expected to consolidate in the medium term. Stronger domestic demand is bringing Indonesia’s growth rate to a 5.1% in 2017 from a 5% the previous year.
The other two emerging or developing economies in the list, Russia and Brazil, are both resurfacing form their respective recessions. Russia should reach a 1.4% growth in 2017, after a cumulative contraction of 3% in the previous two years, thanks to the recovery of oil prices and an easing in financial conditions that is helping to improve domestic demand. After an even harder recession, Brazil will be back to positive growth in 2017, although with a growth rate of only 0.2%. Reduced political uncertainty, the reforms undertaken and an expansionary monetary policy will support gradual recovery.
For advanced economies, the United States is expected to accelerate its pace. The American economy is living a solid consumption growth, and the inventory recovery along with the expectation of a loosening in fiscal policy has brought the US forecasted growth rate to a 2.3% for 2017.
The Euro Area should keep in 2017 a similar pace as it did in 2016, due to a slightly expansionary fiscal policy and a weaker Euro. The Euro area will also potentially benefit from the effects of a United States fiscal stimulus. Among Euro countries, Germany (1.6%), Italy (0.8 %) and Spain (2.6%) are expected to grow at lesser rates, while France will most likely slightly accelerate its pace. Still in the European Union, although not for long, the United Kingdom is weathering the Brexit’s storm better than expected, at least by now. UK’s forecasted growth for 2017 is at 2.0% but, even though there is still great uncertainty, in the medium term Brexit is most probably going to weigh on Great Britain’s economy through increased barriers to trade and migration, a potential depreciation of the pound, the consequent reduced consumer purchasing power and the impact the whole process may have on private investment.
Back in Asia, exports are expected to boost the Japanese economy at a 1.2% growth rate. This slight recovery is not expected to last into 2018, though, as the IMF anticipates the withdrawal of fiscal stimulus and the recovery of imports. For Korea, growth is lightly waning, going from 2.8% in 2016 to a 2.7%, due to a stall in private consumption, political uncertainty and a household debt that remains high.
Australia (3.1%) and Canada (1.9%), both of them commodity-exporting countries, are projected to benefit from the recovery in commodity prices. The sector in Australia will benefit from stronger investment, and Canada will gather the spillovers of a more robust growth in the U.S. and the appreciation of the U.S. dollar.
GDP Growth For World’s Major Economies
To select these 15 countries, we have taken into account their 2017 GDP at current prices in USD as per April 2017 IMF estimates.
GDP Growth for the Major Economies of the World 2015
According to the International Monetary Fund’s latest assessment, “Despite setbacks, an uneven global recovery continues” in 2014. However, the fund lowered its previous estimates. “Largely due to weaker-than-expected global activity in the first half of 2014, the growth forecast for the world economy has been revised downward to 3.3% for this year, 0.4 percentage point lower than in the April 2014 World Economic Outlook (WEO)”, says the October 2014 World Economic Outlook report. “The global growth projection for 2015 was lowered to 3.8%.’
David Lipton, IMF’s First Deputy Managing Director, discuss the need to speed up efforts to invigorate global growth and take steps to prevent some of the very real downside risks of prolonged low growth.
The most recent survey by the IMF about growth prospects around the world, published in October 2014, found that “downside risks have increased since the spring. Short term risks include a worsening of geopolitical tensions and a reversal of recent risk spread and volatility compression in financial markets. Medium-term risks include stagnation and low potential growth in advanced economies and a decline in potential growth in emerging markets.”
of GDP change
In advanced economies, the IMF calls for “continued support from monetary policy and fiscal adjustment attuned in pace and composition to supporting both the recovery and longterm growth.” The urgency of this type of interventions is particularly felt in the European Union, which has grown on average only 1% a year over the last decade (with the economy expected to expand 1.4% in 2014 and 1.8% in 2015), and even more so in the Eurozone. Here, growth has averaged only 0.7% a year for the last ten years and is predicted to hover around 0.8% in 2014 and 1.3% in 2015.
The IMF also recommends that public infrastructure investment be dialled up across the world, as “it can also provide support to demand in the short term and help boost potential output in the medium term,” and that, in advanced economies as well as emerging market and developing economies, structural reforms be pushed through in a timely manner, in order “to strengthen growth potential or make growth more sustainable.”
Among advanced economies, the United States and the United Kingdom stand out for the more sustained recovery they have achieved over the last few months. The American economy is expected grow 2.2% this year and 3.1% in 2015, while the UK’s should expand by 3.2% in 2014 and 2.7% next year.
China and India continue growing at faster than average paces, albeit no longer at the speed at which their economies were expanding in the first decade of the new millennium. For many years, for example, China’s economy was getting bigger at an average rate of around or above 10%, while it is calculated to grow only 7.4% in 2014 and 7.1% in 2015, which, according to experts, is the bare minimum required for China to remain stable. India, which has encountered sudden headwinds in the last year or so, should return to more reasonable, though no longer astounding, growth, expanding by 5.6% in 2014 and 6.4% in 2015.
In the meantime, the Brazilian and Russian economies, which for several years had been posting very high growth rates, have now stalled, due to political instability and economic volatility. Brazil is predicted to grow only 0.3% this year and 1.4% in 2015 while Russia should come in at 0.2% in 2014 and 0.5% in 2015.
Overall, the IMF predicts global growth to come in at 3.3% in 2014 and 3.8% in 2015.