Joy for the business world in 2018: but quite a few fears too

The consensus view among economists is that the business world economy will put in a strong performance in 2018, carrying on its strong momentum from 2017. However, that does not mean that every sector and every company will have a trouble-free business year. Ryanair’s Michael O’Leary will need to repair staff relations, jobs will leave the City of London and inequality will widen. Our financial and economic specialists predict the big stories in 2018.

A good year overall …

The global economy is set fair in 2018. The International Monetary Fund (IMF) recently upgraded its forecast for global growth to 3.7%, to reflect the return to health of manufacturing in most of the developed world and China.

Manufacturing growth was at a standstill in 2014, as China stemmed the flow of unprofitable cheap exports and the eurozone wrestled with the Greek debt crisis.

This year has proved more buoyant. A dramatic rise in global trade pushed factories across the business world to their highest output for decades during November. It is a trend that forecasters expect to continue into 2018.

Donald Trump’s tax cuts, which were pushed through Congress at breakneck speed, are another shot in the arm – even if the only effect is to raise business and consumer confidence levels over the next year.

Oil prices have risen sharply to more than $60 a barrel from a low point below $40 last year, but analysts expect further rises to be muted, allowing growth to continue without an increase in fuel costs putting on the brake.

The IMF highlighted Brexit as a possible drag on the prospects for growth, along with high levels of global debt. But with stock markets hitting new highs at the end of the year, the picture remains quite rosy.

After a year of booming stock markets around the globe, commentators are virtually unanimous in predicting that returns in 2018 won’t match those of 2017. The S&P 500 surged 20% this year to a new record high, the Dax index in Germany jumped 13% and, in Paris, the market was up 10%.

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