The global economy may this year see its fastest growth since 2011, driven mostly by African countries. It will also be its most energy-hungry ever, according to the latest Global Economy Watch (GEW) forecast by PwC.
"Among the 17 countries with a faster economic growth than China will be India, Ghana, Ethiopia and the Philippines, which will lead to a broader growth in Africa and the Asian economies. According to our GEW, of the ten fastest growing economies, eight could be African," said Csaba Polacsek, business advisory partner at PwC Hungary.
PwC released its final Global Economy Watch of 2017, with predictions for 2018. According to a press release sent to the Budapest Business Journal, one of the main findings of the final GEW of last year is that global economic growth may be the fastest since 2011.
PwC says that the global economy will likely grow by almost 4% in purchasing power parity (PPP) terms. More importantly, it stresses, this growth is expected to be broad-based and synchronized, rather than dependent on a few countries.
The main engines of the global economy (the United States, emerging Asia and the Eurozone, which comprised 60% of world GDP in 2017) are expected to contribute almost 70% of economic growth in 2018 in PPP terms, compared to their post-2000 average of around 60%, PwC says.
PwC also expects that this year will be "the beginning of the end of easy money," with the European Central Bank (ECB) likely to further reduce its monthly asset purchases in 2018. Generally, PwC expects monetary policy to somewhat tighten in the G7, reflecting closing output gaps in some advanced economies and stable inflation expectations.
The global economy is on course to consume almost 600 quadrillion British thermal units (BTUs) of energy this year, double its 1980 level and the highest level on record, PwC predicts. India and China together will consume about 30% of global energy, which will be about six times more than the African continent. Reflecting the slow shift towards renewable energy sources, 10% of global energy consumption is expected to be in renewables, with China consuming twice as much renewable energy as the United States, PwC says.
As for oil prices, PwC expects them to remain broadly stable in real terms in 2018. In November, OPEC and its allies agreed to extend the 1.8 million barrels per day (mb/d) supply cut until the end of 2018. Though part of OPEC, Iran was permitted a lower cut, to 10.05 mb/d, as it recovers from nuclear-related sanctions. This is likely to keep oil output growth modest, provided the deal proves viable over time.