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Developments in the World and Turkish Economies
The global economy’s growth rate remains below its long-
term average.
In the April 2017 update of its Global Economic Outlook report
the IMF said that global growth, which had weighed in at 3.4%
in 2015, slipped to 3.1% in 2016. According to the same report,
2016 economic growth among the developed countries was
only 1.7% whereas among the developing countries it was on
the order of 4.1%.
While upwards revising its 2017 and 2018 growth rate
projections for developed countries in general by a tenth
of a percentage point, the IMF also did the same for the US
economy based on its assumptions about the impact which
the Trump administration’s growth-focused policies would
have. In the case of its 2018 projection, the 0.4 percentage
point upward revision in the US economy’s growth rate drew
particular attention.
In the case of the UK, the IMF said that, subject to the
contingencies of its post-Brexit referendum performance, the
British economy was likely to grow somewhat faster in 2017
than previously anticipated however the fund also lowered its
2018 projection. Elsewhere there was a surprising recovery in
economic activity in Japan thanks to strong net exports as well
as in euro area countries such as Germany and Spain as a result
of strong domestic demand.
Economic performance across emerging market and developing
economies remained mixed however said the IMF. While
China’s growth remained a strong 6.7% reflecting continued
policy support, activity slowed to 6.8% in India because of the
impact of the currency exchange initiative and in Brazil, which
has been mired in a deep recession, the economy shrank by
3.6%. Activity also remained weak in both fuel and nonfuel
commodity exporters more generally, while geopolitical factors
held back growth in parts of the Middle East and Turkey.
THE WORLD ECONOMY
The outlook for global growth remains uncertain.
Having achieved only a fairly modest recovery in the aftermath
of the worldwide financial crisis, global growth remained as
weak as ever in 2016. Improvements in economic growth
figures coming from such places as the US, the euro area,
the UK, and Japan were hampered by weak performance in
developing countries other than China and India.
The emergence of a “Yes” majority in the UK’s so-called “Brexit”
referendum on whether or not to leave the European Union
that took place in June last year was one of the triggers that
altered the world’s political climate. That result currently makes
it impossible to make any meaningful predictions about the
future course of economic policy in Europe.
The second trigger was the outcome of the US presidential and
congressional elections that took place in November. Given
their implications of a more introverted US policy stance,
these results also raise a host of uncertainties with respect to
upcoming elections due in Europe.
The likelihood that these two developments will influence the
approaches and decisions of other countries will also determine
the course of global economic policies in the period ahead as
well. Because of the uncertainty and volatility with which it is
beset, the world’s overall political landscape poses a variety of
problems for both the developed and the developing countries.
The first indications of the impact that recent developments
(mainly in trade) are viewed as being likely to have on fiscal and
monetary policies and on capital flows have already begun to
manifest themselves in global financial markets in the form of
higher interest rates and the repricing of assets.
Weak global economic growth
Having achieved only a fairly modest recovery in the aftermath of the worldwide financial crisis, global growth
remained as weak as ever in 2016.
Annual Report 2016
The Association of Financial Institutions
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