Are Economic Growth Forecasts Too Optimistic?

The global economy is in an abnormally optimistic state as we enter 2017, despite falling well short of economic growth targets over 2016

Dan Kemp 8 February, 2017 | 10:00AM
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The global economy is in an abnormally optimistic state as we enter 2017, despite falling well short of economic growth targets over 2016. To provide context, the global economy grew at an estimated 2.3% in 2016 according to the World Bank, down from mid-year expectations of 2.4% and well below the original expectation of 3.4%.

Even the U.K. has demonstrated resilience, with optimism abounding despite concerns about Brexit

This backdrop also defies the super cycle of monetary stimulus, with strong quantitative easing programs over the past seven to nine years inducing a significant spike in money supply but a lack of genuine progress in the global economy. In fact, the amount of cash in the U.S. system has more than doubled from $1.4 trillion to $3.3 trillion since the beginning of 2008, yet the economy has only grown by 28.6% in nominal terms.

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Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA

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