Despite the threat of trade
disputes, the global economy
remains resilient. We believe the
U.S. is a key driver of the overall health of
continued global economic expansion. We
have revised our global economic forecast,
projecting growth at 3.8% for the year, down
slightly from our outlook in January. (Chart 3)
We project global GDP
growth at 3.8% in 2018.
Eurozone GDP performance has been tepid
and weaker than expected this year, with
growth at a 0.4% non-annualized rate. We
believe a markedly harsh winter in areas of
Europe and an uptick in work absences due
to seasonal illness contributed to the less
than stellar performance. We think the
first-quarter slowdown was exaggerated
and expect a slight rebound in growth
going forward. A similar phenomenon
happened in the U.K., where we also
expect growth to rebound, although
increasing friction in Brexit negotiations
about the U.K.’s exit from the European
Union (EU) has created downside risks.
Chart 3: Ivy projects 2018 Global GDP growth may pick up after slow start to the year
Source: Chart shows actual and forecast annual gross domestic product growth. Source 2017, International Monetary Fund actual data; 2018 Ivy forecasts; all based on purchasing power parity.
Past performance is not a guarantee of future results. The forecasts are current through June 2018, are subject to change at any time based on market and other current conditions, and no
forecasts can be guaranteed.
The European Central Bank (ECB)
announced its plans to halt its quantitative
easing program later this year while keeping
interest rates at record lows at least until
summer 2019. The ECB’s announcement was
a noteworthy change from its prior position
because it marked the bank’s first move to
unconditional calendar-based guidance on
its plans and away from its prior approach of
issuing guidance based on the state of
economic conditions. However, the ECB
could delay any changes to its program and
prolong its current monetary policy if recent
economic weakness continues.
Japan’s lackluster economic performance
in the first quarter caused us to lower our
growth projection to 1.2% for the year.
However, we believe growth could pick up
in the second half of 2018 based on our
expectations for solid employment growth,
fiscal stimulus, an influx of construction
projects in anticipation of the 2020 Summer
Olympics and an increasing desire for
companies to make investments in capital
expenditures. Given soft inflation data, we
expect the Bank of Japan to continue
trailing other central banks in tightening its
Emerging market economies are holding
up well as global interest rates remain at
relatively low levels versus historic norms.
We have amended our forecast growth
rate to 7.3% for India, making it the fastestgrowing
country among major emerging
economies. Our views on China, however,
have become slightly more measured.
Government efforts to curb pollution resulted
in multiple closures of heavy industrial plants,
which weighed on growth in the first quarter.
In addition, government action to temporarily
pause and inspect public-private partnership
initiatives has finished. We believe China is
poised for a GDP growth rate of 6.4% in
2018. Lingering trade tensions with the U.S.
still are cause for concern for China, as well
as for other global powers.
Past performance is not a guarantee of future results.
Investment return and principal value will fluctuate, and it is possible to lose money by investing. International investing involves additional risks, including currency fluctuations, political or
economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in the energy sector
can be riskier than other types of investment activities because of a range of factors, including price fluctuation caused by real and perceived inflationary trends and political developments, and
the cost assumed by energy companies in complying with environmental safety regulations. These and other risks are more fully described in a Fund’s prospectus.
The opinions expressed are those of Ivy Investment Management Company, are current through June 2018 and are subject to change at any time based on market and other current conditions.
No forecasts can be guaranteed. This information is not a recommendation to purchase, sell or hold any specific fund or security mentioned or to engage in any investment strategy. Funds or
securities discussed may not be suitable for all investors.