Despite protectionist rhetoric from the US and gloomy forecasts from the IMF, Deloitte believes three factors suggest global growth is about to surprise on the upside, with Asia leading the way, and with it, flow-on benefits for Australia.
Chris Richardson of Deloitte Access Economics explains in the group’s Voice of Asia series that the global economy is finally normalising after a decade of shocks, and a natural healing process is underpinning a more resilient recovery.
“Second, world trade is already lifting and the benefits of this are spilling into Asia. And third, Asia’s mega-economies of India and China, are increasingly being powered by consumer booms, acting as a stabilising force in their economies and for the region,” Mr Richardson said.
He added that this “triple treat” of positives plays Australia’s way — the healthier the global backdrop, the better the chance that 2017 will finally put to rest Australia’s income recession of the past five years.
“Yes, there are risks, with those for 2017 revolving around the potentially volatile mix of President-elect Trump, trade and tariffs — but there are always risks, and too many forecasters are too negative on Australia’s 2017 outlook,” Mr Richardson said.
Global economy stabilising
Following a series of shocks that began with the global financial crisis and then, in quick succession, the Eurozone debt crisis and the geopolitical shocks in the Middle East, Europe and Asia, the global economy is finally normalising.
Deloitte’s report predicts that global growth could in fact accelerate in 2017, with leading indicators already pointing to a lift in world trade.
“This will begin a virtuous circle in which global growth triggers an upsurge in trade which, in turn, fuels stronger growth,” it said.
“Asia’s major markets of China and India are also powering ahead and growth in most other countries in the region are strengthening, aided by a buoyant US economy.”