Global economy expected to continue its expansion - Wells Fargo

According to analysts from Wells Fargo, the global economy is expected to continue its expansion in 2018. They expect the US Dollar to weaken somewhat.

Key Quotes: 

“The global economy is expected to continue its expansion in 2018, even as historically expansive monetary measures taken across the globe since the Great Recession are slowly being undone by the major central banks. Still, today, it is only the U.S. Federal Reserve and to a lesser degree, the Bank of Canada and Mexico, who seem to be charging ahead with other large central banks starting to revise their views on their own policies to accommodate for higher economic growth and even the potential of higher inflation.”

“Even as economic growth has improved across the globe, this growth has had little effect on global inflation, which historically tends to raise eyebrows of policymakers and make them take a harder look at their monetary policy stance.”

“What is new this year, and a change from our thoughts more than a year ago, is that we are expecting the U.S. dollar to weaken somewhat. We expect that the rest of the developed world’s central banks will start to slowly move into more of a synchronized monetary policy effort, rather than the U.S. Federal Reserve being a lone ranger in terms of monetary policy
tightening.”

“This has implications not only for interest rates across the world but also for commodities, as we have seen some upward pressure on commodity prices lately, which could help the commodity exporting world during the year. At the same time, higher economic growth across the world would probably put some more pressure on commodity prices, even though we are not expecting a China-driven commodity price/commodity export boom, as the global economy experienced during the first decade and a half of this century.”

“We also remain concerned with several risks that are political in nature.”

“However, for now, we remain positive for the global economy as we enter 2018, even if we acknowledge that upward surprises in both economic growth as well as inflation could make central bankers in the large developed countries pull the levers of monetary policy across the world faster than what we currently foresee.”