The most recent data confirm our forecast of the recovery of the world economy at moderate pace (Chart 1).
US GDP growth in the first quarter disappointed. Business cycle indicators and fiscal policy plans suggest a slight downward revision in our US forecast for 2017-2018.
Chinese economy accelerated in Q1 (6.9 per cent) although growth still supported by public sector with mounting pressures on debt. Some clouds moving in.
Main emerging countries in different cyclical position: stable growth for India, recovery in Russia, Brazil still in deep recession. Inflation pressures are fading, leaving room for expansionary monetary policies.
World trade improving with a strong contribution of emerging market imports, China included.
Oil prices weak due to insufficient production cuts and shale production increases, in a context of steady demand.
Italy is staying on course
As in our baseline scenario, the French election did not result in any negative surprise and the recently released euro-area GDP growth for 2017 Q1 confirms our expectations (0.5 per cent
In Italy as well the first release of GDP Q1 growth rate at 0.2 per cent is in line with our expectation of a recovery… Italian style!
This confirms our projections of GDP to grow by 0.9 per cent this year (Chart 2).
EU unemployment is slowly decreasing but indicators of social stress are still on the rise (see our first InFocus).
Following the European Commission recommendations, the supplementary budget measures adopted in April aim at reducing the 2017 deficit by 0.2 pp of GDP to 2.1 per cent, unlikely to be reached in our view (see second InFocus).