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Four stories shaping the global economy this month

Things are looking up in the global economy with stronger capital flows to emerging economies, faster growth in Africa and a rebound in Latin America. Tourism and international trade are also advancing, but more demand for transportation may cause carbon emissions to soar. Every month 缅北禁地DESA’s World Economic Situation and Prospects Monthly Briefing brings you the latest in the global economy.

A turning tide – capital is flowing back to emerging economies

On the back of subsiding global policy uncertainties and improving economic conditions since the beginning of 2017, investors have grown a stronger appetite for risk. After years of capital outflows from emerging economies, the tide is starting to turn and the money is starting to come back. An optimistic global financial outlook, a rebound in global trade and improving economic conditions in emerging countries have all contributed to this upward trend. But just like their namesakes, capital flows inevitably come in high and low tides. Emerging economies will need to implement a combination of macroeconomic, foreign exchange and macro?prudential policies to maximize the opportunities and minimize the risks of this boom-and-bust cycle. Read more.

Tourism and international trade are growing and so are their carbon footprints

Tourism is enjoying an uninterrupted solid growth not seen since the 1960s. At the same time, global trade is expanding at the fastest rate in six years. Both these signs of a healthier economy may spell trouble for the environment. Around 80 per cent of global trade volume is moved by ships and about half of all tourists arrive to their destination by plane. Between them, aviation and shipping are responsible for 3.5 per cent of greenhouse gas emissions globally. Emissions from the two industries are growing faster than those from road transport and, if current trends persist, they could double or even triple by 2050. Read more.

Africa’s economic growth is catching up with population growth

Africa’s economic growth, excluding Libya, is expected to stand at 2.6 per cent in 2017. That represents an increase of one per cent over last year and is higher than the rate of population growth on the continent, estimated at 2.5 per cent. A combination of external and internal factors has contributed to the uptick. Externally, stronger demand and a slight pick-up in commodity prices have played a role in speeding up the continent’s growth. Domestically, growing private consumption, increased investment and strong government expenditure are contributing to the improved conditions for growth. Read more.

Latin America and the Caribbean rebound after two years in the red

Amid more favourable global conditions, Latin America and the Caribbean are headed for a mild economic recovery in 2017-2018. After two consecutive years of contraction, the region’s economy is expected to grow by one per cent in 2018. Most of this improvement can be attributed to Argentina and Brazil, which have emerged from recession. As in the case of Africa, a stronger external demand, slightly higher commodity prices and favourable external financing conditions have spurred the growth. Domestically, falling inflation and looser monetary policy have also played a role. However, the region’s recovery remains shallow and uneven. Political uncertainty persists in several countries, fiscal consolidation is needed and structural barriers to growth remain. This includes inadequate infrastructure and weak labour productivity. Read more.

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