Global
Economic
Outlook
3rd Quarter 2017
Global Economic Outlook
Introduction|2
By Ira Kalish
In this issue, our team of global economists exam-
ines the issues and economic trends in the United
States, China, Eurozone, India, Japan, United
Kingdom, Russia, and Turkey, along with a special
article on the rising sentiment against globalization.
United States: With the policy
status quo, 2017 looks a lot
like prior years|6
By Patricia Buckley
Healthy employment growth and moderate in-
creases in GDP continue to defne the US economy,
even as the composition of the labor force evolves.
But domestic demand is only part of the growth
equation.
China: Slowly
stabilizing|14
By Ira Kalish
China’s economy appears to be stabilizing gradually,
boosted by rising industrial production and higher
foreign currency reserves. However, questions loom
large over its market status and sovereign risk rat-
ing.
Eurozone: Summer-blue skies
for the economy|18
By Alexander Brsch
With the economy recovering faster than antici-
pated, fears of a fragmentation of the Eurozone
seem to have temporarily eased. However, political
uncertainty is far from over—much depends on the
outcome of the Brexit negotiations and elections in
Austria and Italy.
India: Wiggling through
demonetization and
GST|22
By Rumki Majumdar
India’s economic growth has slowed down, and
demonetization is only partly to blame. While
the near-term economic outlook remains mired
in uncertainty as India transitions to a new sales
tax regime, the government’s ability to take on
difcult reforms bodes well for the long term.
Japan: An accelerating
economy, though not quite at
breakneck speed|30
By Ira Kalish
The Japanese economy appears to accelerating
more robustly, with low unemployment, strong ex-
port growth, and positive monetary policy possibly
contributing. Of course, a declining population is
still a concern.
United Kingdom: Growth
cools amid growing political
uncertainty|34
By Ian Stewart
Uncertainty looms large over the United Kingdom,
as a hung parliament in the recent general
election has compounded Brexit-related concerns.
Economic growth is likely to be impacted as
consumers, already grappling with rising infation,
clamp down on spending.
Global Economic Outlook
CONTENTS
II
Russia: Back to growth, but
economic diversifcation
remains a challenge|38
By Lester Gunnion
Although Russia’s economy seems to be on the path
to recovery, growth in 2017 is unlikely to be robust.
The longer-term growth outlook will, in large part,
be determined by the success of its import substitu-
tion strategy and ability to make headway into new
markets amid Western sanctions.
Turkey: Uncertainty giving
way to growth|46
By Akrur Barua
Buoyed by two consecutive quarters of growth and
a more stable political environment, things seem
to be looking up for Turkey. Concerns, however,
remain about a weak currency, higher infation, and
feeble investment.
Special topic: Why reversing
globalization may not be a
good idea|52
By Rumki Majumdar
After the 2008 global fnancial crisis, global
leaders pledged to avoid protectionist
measures in order to speed up economic
recovery and boost growth. However,
protectionism has been rising since.
Is a retreat from globalization
possible If not, what is the
way forward
Economic indices|64
Additional resources|67
About the authors|68
Contact information|69
Illustrations by Stephanie Dalton Cowan
Contents
III
Global Economic Outlook
Introduction
By Ira Kalish
A
T a time when the global economy appears
to be accelerating, the two leading econo-
mies of the English-speaking world are not
participating. The UK economy is evidently slowing,
while the US economy simply continues to grow at
a modest pace—albeit in the context of full employ-
ment. Likewise, the Chinese economy is also stabi-
lizing at a moderate rate of growth. Meanwhile, the
Eurozone and Japan show signs of acceleration, as
do many of the major emerging economies such as
Turkey and Russia, both of which are discussed in
this report. One exception is India, which shows
signs of slowing. Yet the overall trend is positive.
Indeed, the central banks of most of the major de-
veloped economies are either starting to normalize
monetary policy or are thinking about it. Perhaps
the most signifcant threat to the health of the global
economy is the specter of protectionism. In this edi-
tion of Deloitte’s
Global Economic Outlook
, all of
these countries and issues are examined.
We begin with Patricia Buckley’s discussion of
the US economy. She notes the demographic con-
straints on growth, not only infuencing the supply
side of the economy but also hurting the growth of
domestic demand. Weakness in exports, emanat-
ing from a strong US dollar, has also suppressed
growth. Patricia expects, however, that the dollar
will not rise any further and may decline, possibly
leading to an improvement in exports. Finally, she
says that signifcant uncertainty about the future of
policy means that it is fruitless to speculate on the
potential impact of policy changes.
Next, I examine the economic situation in China.
There economic growth has stabilized, while foreign
currency reserves have started to rebound as capital
controls have helped to stabilize the currency. How-
ever, the rising volume of debt has created a greater
perception of risk, leading to the downgrading of
the country’s sovereign debt. Meanwhile, the possi-
bility that China could obtain market-economy sta-
tus threatens to boost trade tensions between China
and the United States.
In his article on the Eurozone, Alexander Brsch
notes that the region has hit a sweet spot, with ac-
celerating economic growth, rising employment,
and diminishing political risk following favorable
election results in France and elsewhere. However,
he also notes that other risks remain, including up-
coming elections in Italy and Austria, as well as the
potential fallout from the Brexit process. By country,
Alexander says that Spain’s situation is “dynamic,”
Germany’s is “rosy,” and the recoveries in France
and Italy are “moderate, but gaining momentum.”
India is the subject of our next article by Rumki
Majumdar. She notes that there were signs of slow-
ing economic activity even before the controversial
demonetization. Although she says that there may
be some short-term negative efects from the imple-淘宝店铺
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