Global Economic Outlook 2016 - Key Findings

MAY 2016


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Global growth remains modest for the remainder of 2016 with little upside for 2017

In the past few months the global economy has struggled to get back on its feet from a rough ride at the beginning of the year. The Conference Board outlook for global economic growth remains modest at 2.4 percent in 2016 and at 2.7 percent in 2017. While growth rates between mature and emerging markets have rapidly converged, significant variation between regions remains.

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Economic & Business Outlook

US: Economic growth remains subdued

  • Despite a developing rebound for the second half of the year, GDP growth for the United States is adjusted downward to 1.7 percent for 2016, as a result of a weak GDP growth in the 1st quarter
  • Although  employment growth and stronger housing trends support consumer spending, faster wage acceleration is the key to sustain income levels and support consumption as the key driver of growth
  • Weak investment remains a key source of slow U.S. growth, which is one cause of slow productivity growth
  • The combination of rising wage levels and low productivity provides an increased threat to profits in the coming quarters 

EURO-AREA: Continued modest growth in 2016

  • Despite increased political risks, the short-term economic environment in Europe is relatively favorable compared to other mature economies.
  • Domestic demand and improving labor markets continue to drive the current moderate recovery, but the effects of pent-up demand and lower oil prices are waning.
  • Investment and productivity are projected to somewhat improve, paving the way for some growth acceleration towards the end of the decade.

ASIA-PACIFIC: Growth is unlikely to improve further

  • Growth rates for China, India and Southeast Asia are unlikely to see significant improvement in 2016 compared to last year.
  • Growth in China in 2016 is expected to stay the same as in 2015 at 3.8 percent (for more information see this FAQ)
  • When using The Conference Board’s slower growth rates for China – compared to the official estimates –, India looks to have overtaken China role as the growth champion of the region. However, we do not expect any improvement in India’s growth performance in 2016 relative to 2015.

LATIN AMERICA: Losing the race?

  • Rapid falls in oil and commodity prices have negatively impacted Latin American economies, and exacerbated the ongoing troubles in the biggest economy in the region, Brazil.
  • To help lift economic potential and drive productivity growth, more private sector and foreign investment is needed as well as integration of the informal sector into large and modern business practices.

SUB-SAHARAN AFRICA: Positive, but uncertain

  • The prolonged decline in commodity prices, as well as weak growth in Nigeria and South Africa, will cause overall growth for the region in 2016 to come in at 2.6 percent, the region’s slowest growth performance in two decades.
  • The region still has a lot of potential for economic expansion in the medium to long run, mainly due to its large demographic dividend and ample room for catch-up. However, several political and institutional constraints offer significant uncertainty. 

 

Related material (members only)

May 2016

StraightTalk® Global Economic Outlook 2016: May 2016 Update

  • Strategic overview

Special report on Sub-Saharan Africa

  • Climbing a Steeper Hill? Sub-Saharan Africa’s recent economic development and business prospects

 

February 2016

StraightTalk® Global Economic Outlook 2016: February 2016 Update

  • Strategic overview 

 

November 2015

Global Economic Outlook 2016: The Global Economy in a Holding Pattern

  • A full overview of The Conference Board Global Economic Outlook 2016
  • Business implications by major countries and regions

StraightTalk® Global Economic Outlook 2016: Escaping the Global Economy's Holding Pattern

  • Strategic overview

Global Economic Outlook 2016: How to Support Profits in a Slow Global Economy

  • Strategic implications for the Chief Financial Officer

Global Economic Outlook 2016: Anticipating Labor Market Tightness at Times of Slow Global Growth

  • Strategic implications for the Chief Human Resource Officer

 

Next update

The next quarterly update of The Conference Board’s Global Economic Outlook is scheduled for September 2016, and will be accompanied by a special report on the outlook for profits.

Sub-Saharan Africa

As sub-Saharan Africa’s growth pains continue in the coming decade, businesses must adopt a range of strategies to succeed across different groups of economies (undiversified, agricultural, frontier, and fragile) in the region.

Sub-Saharan Africa: Climbing a Steeper Hill?

Watch an on-demand webcast on the topic

Global Economic Outlook - Data & Methods
Contact
Abdul A. Erumban
Senior Economist
ted.geo@conference-board.org