Global economy expected to grow in 2017

The global economy is poised to showcase its strongest performance in five years in 2017, according to a forecast by Standard Bank. The financial institution is predicting global growth to fall between 3.3% and 3.5% this year. In a recent interview with CNBC Africa's Fifi Peters, Goolam Ballim, the Chief Economist of Standard Bank, shed light on the main drivers behind this growth resurgence and how it is expected to impact economies around the world, particularly in South Africa. Ballim highlighted that the global economy had gained significant momentum towards the end of last year, a trend that has carried over into 2017. The United States stands at the forefront of this growth surge, with projections indicating that it may experience its best year of growth in over five years. This growth is not solely attributed to Donald Trump's policies but is supported by a combination of positive indicators, including consumer health and fixed investments. Moreover, both advanced economies and emerging markets are contributing to this growth revival. In Europe, stability is being propelled by fiscal and monetary policies, while emerging markets like Russia, Brazil, and China are witnessing positive growth trends. This synchronized global growth is expected to have a ripple effect, benefiting countries like South Africa. The surge in global growth is likely to have a positive impact on South Africa's economy, particularly through the buoyancy of commodity markets. With China's contribution to global growth, commodity prices have surged, providing fiscal stimulus to countries in sub-Saharan Africa, including South Africa. For instance, the increase in oil prices has doubled in certain regions, leading to overall economic growth and recovery. In terms of market trends, a continuation of the 'reflation trade' that followed Trump's election victory is evident. Market decisions are being influenced by expectations of economic stimulus, although uncertainties remain regarding the potency of Trump's tax policies. While Trump's promises have boosted market sentiment, Standard Bank remains cautious about the actual impact of these stimulus packages. One key concern for 2017 is the potential for a trade war between the US and China. Despite recent reports suggesting an amicable phone call between the two leaders, the looming threat of a trade war remains. The US, with a sizable trade deficit with China, aims to reduce the influx of Chinese products into its economy. Should a trade war ensue, Ballim suggests that it could disproportionately harm China, given the significant dependency on American exports. Standard Bank's chief economist anticipates a negotiated approach to resolve trade tensions, with China likely to make concessions to allow American products into its market. Rather than a confrontational stance, a bilateral agreement could alleviate some of the trade tensions between the two economic powerhouses. As the global economy gears up for a promising year of growth, uncertainties surrounding trade policies, market dynamics, and geopolitical relations remain pertinent. The collaboration between nations and prudent economic strategies will play a pivotal role in sustaining and maximizing the potential benefits of this growth resurgence.