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Global economic outlook for 2015:Promising and Precarious

Source: Taiwantrade | Updated: 04 March 2015

IMF forecasts


IMF’s “World Economic Outlook,” published in Oct. 2014, forecasted the global economic growth rate to be 3.8 % in 2015. The recovery of global economy will continue but is precarious and uneven around the globe. Overall, the 5 % economic growth rate of the emerging economies is superior to 2.3 % of the advanced economies in 2015.


The United States and its QE policy


While global political unrest continues, regional conflicts present uncertainties for steady economic outlook in 2015. According to IMF, the economic growth rate of the United States is expected to be 3.1% in 2015. Specifically, successful shale gas technology is beneficial for the US economy. As QE ends, the US Fed will guide its monetary policy towards normality. However, further impact for global economy and international finance needs to be closely monitored. Meanwhile, the end of QE will bring risks to the development of the emergent markets with respect to the fluctuating interest rates. 


Emergent markets’ potential and mixed signals


Although observers have been skeptical of its high economic growth, China is nonetheless leading an indispensable role in the world economy; IMF forecasted China’s GDP growth to be about 7.4 % in 2014 and gradually slowing down to be between 6 % and 7 % over the long term, and despite the slowdown, China’s market share as well as its purchasing power remains significant in the global economy. Meanwhile, other emerging markets such as Brazil and other Latin American countries are also showing signs of slowing down due to weak domestic demand.


In contrast, countries such as India, Indonesia and Egypt present optimistic developmental trends for 2015. India’s Prime Minister Narenda Modi initiates the strongest mandate of USD 11.7 billion for the infrastructure development since 1984, aiming to implement high-speed railway project and develop 100 smart cities. Newly elected Indonesian President Joko Widodo pledged to promote investment climate and improve infrastructural facilities. Egypt’s Abdel Fattah el-Sisi intended to canalize new Qanā al-Suways for creating a new logistic center in the Middle East. In addition, ASEAN economic community (AEC) is expected to form in 2015, which will be the 2nd largest global common market after EU. 


Taiwan’s economic trend in 2015


Strong external demand accelerated the growth of exporting goods and services as well as drove the domestic demand to record high since Q3 in 2014. Taiwan's GDP was estimated to grow by 3.43 % in 2014.  As the world economy is anticipated to improve slightly in 2015 due to growing demand on mobile, internet and smart-tech applications as well as semi-conductor and electronic industries, Taiwan's GDP is expected to grow by 3.5 % in 2015. With stronger US dollars as well as more collaboration with China and the United States, Taiwan shows optimism for 2015.

Ruei-Weng Shen (rwshen@taitra.org.tw)


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