Global economys rise a matter of good policy, luck
A year ago, with the election of a U.S. president who had fulminated against the international trade and financial systems, some analysts worried that the engine of global prosperity might soon be sputtering. But that’s not what happened.
The global economy has surged forward this year, significantly outperforming expectations. As the International Monetary Fund wrote in its latest world economic outlook, published in October: “The current upswing reaches more broadly than any in a decade — roughly 75 percent of the world economy … is sharing in the acceleration.”
The IMF revised upward its forecast for the global economy, predicting 3.6 percent growth this year and 3.7 percent in 2018, powered by surging activity in Europe, Japan, China and America. The U.S. will grow more slowly, at 2.2 percent this year and 2.3 percent in 2018, but that’s better than 2016’s anemic 1.5 percent.
Goldman Sachs’ forecasters are even more bullish. A November report, titled “As Good as It Gets,” offered this tonic for investors: “For the first time since 2010, the world economy is outperforming most predictions, and we expect this strength to continue.” Goldman projects 3.7 percent global growth this year and 4.0 in 2018.
So why, you might ask, does the U.S. need a tax cut amid this global surge? Good question. Many economists warn that by ballooning the deficit and creating an artificial “sugar high” in the U.S. economy, the tax-cut legislation passed by the House and Senate would add little to U.S. long-term growth and could actually make it worse.
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