Euromonitor International projects a global economic expansion surpassing $80 trillion in 2018, driven primarily by emerging markets, despite ongoing risks such as a slowdown in China and Brexit uncertainties. The report highlights the emergence of the U.S. and China as leaders in disposable income growth, while noting improvements in business environments in countries like India and Nigeria. Challenges persist, including low productivity growth in advanced economies and a significant electricity deficit in sub-Saharan Africa.

1. ECONOMIES IN 2018
January 2018

2. © Euromonitor International PASSPORT 2ECONOMIES IN 2018
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies’ opinions, reader
discretion is advised.
Despite ongoing risks,
Euromonitor International
expects an improving outlook
for the global economy in 2018,
with broad, sustained growth
and low inflation resulting in
GDP in constant terms
surpassing US$80.0 trillion for
the first time. Emerging market
economic growth will outpace
advanced countries but positive
US and eurozone outlooks will
underpin growth. We offer key
insights from economy, finance
and trade; cities; business
dynamics; industrial; and
natural resources perspectives.
Economies in 2018
ECONOMIES IN 2018
Economy, Finance
and Trade
Cities
Business
Dynamics
Industrial
Natural Resources

3. © Euromonitor International PASSPORT 3ECONOMIES IN 2018
 Euromonitor International forecasts that the global
economy will expand by an additional US$2.9
trillion in constant terms in 2018, to surpass
US$80.0 trillion. Developed economies will account
for 60.0% of the total but growth is being driven by
emerging and developing countries.
 An improved outlook in major economies like the
USA, India and Brazil will coincide with a continued
Chinese slowdown and the uncertainty of Brexit
weighing on UK economic growth further.
 However, risks to the global economy include a
China hard landing with the added complication of
the country’s high private debt burden, a more
general emerging market slowdown, or a conflict
between the USA and North Korea.
 Euromonitor International expects emerging
markets to account for 57.0% of global economic
growth in 2018; US cities to lead per capita
disposable income growth in absolute terms;
higher education levels to continue improving;
China to focus on innovation-led production; and
rural Sub-Saharan Africa to have the lowest access
to electricity globally.
The global economic landscape in 2018
ECONOMIES IN 2018

4. © Euromonitor International PASSPORT 4ECONOMIES IN 2018
• Private sector optimism
• Supportive monetary policy
• Low interest rates
• Weak inflation
• Low financial market volatility
• Advanced economies
companies boosting investment
• Room for emerging market
convergence
• High global debt
• Leverage risks shifted to
emerging markets
• Overvalued stock/corporate
bond prices
• Weak productivity growth
• Slow wage growth in advanced
economies
• Income inequality
• Protectionist/populist risks
• Geopolitical risks
The global economy in 2018
ECONOMIES IN 2018

5. © Euromonitor International PASSPORT 5ECONOMIES IN 2018
 Although inflation remains low in
advanced economies, weak
productivity growth is hindering
economic potential. Meanwhile, Brexit
will continue to weigh on UK
economic growth, resulting in one of
the lowest forecasts of the G7;
 China’s economic slowdown is set to
continue, with the slowest rate of
expansion in 2018 (6.3% y-o-y in real
terms) since 1990;
 The future of NAFTA (North
American Free Trade Agreement) will
pose a key risk for the region in 2018.
The global outlook has improved for 2018. Euromonitor International forecasts the same or stronger real
GDP growth in 110 of 195 economies in 2018 vs 2017:
 Global annual real GDP growth is expected to increase by 3.7%;
 Advanced economies growth is forecast to stay close to 2.0%, with above trend growth in the USA and
optimism in the eurozone;
 Emerging and developing economies growth will likely reach nearly 5.0% and will account for 57.0% of
global growth with continued improvements in major economies like Brazil and Russia;
Emerging markets drive global economic growth in 2018
ECONOMIES IN 2018
Source: Euromonitor International Macro Model
Global Real GDP Growth Forecasts 2018
% %
0
1
2
3
4
5
6
0
1
2
3
4
5
6
2014 2015 2016 2017 2018 2019 2020 2021
Advanced Economies
World
Emerging Markets
4.8
2.1
3.7

6. © Euromonitor International PASSPORT 6ECONOMIES IN 2018
US and Chinese cities to lead disposable income growth in 2018
ECONOMIES IN 2018

7. © Euromonitor International PASSPORT 7ECONOMIES IN 2018
 Per capita absolute growth in real disposable
income is expected to be dominated by US
cities going into 2018. It signifies a further
resurgence of the US economy, which has
experienced consecutive quarterly real GDP
growth since the third quarter of 2016.
 Buoyed by strong business investment and a
reviving manufacturing sector, labour
productivity in US cities is expected to creep up,
which, over 2011-2016, had stagnated. This in
turn will put upward pressure on wages; Boston
has, for example, experienced 1.6% real growth
in its wage per hour between 2016 and 2017—
the highest rise of any leading US city.
 The increasing spending power of consumers
will favourably position US cities for investment
and consumption - in contrast to Western
European cities where growth will be less
impressive; for example Boston, San Francisco
and New York are projected to add three times
as much in real per capita disposable incomes
compared to Western European cities such as
London or Paris in 2018.
US cities to lead per capita disposable income growth in 2018
ECONOMIES IN 2018

8. © Euromonitor International PASSPORT 8ECONOMIES IN 2018
Global business environment in 2018
ECONOMIES IN 2018
53
regulatory reforms in the top 10
most improved scores in Ease of
Doing Business
100%
of businesses using the internet
for the first time in Uruguay and
El Salvador
26.6%
of the economically active
population will be unemployed in
South Africa
95
97
99
101
103
105
107
109
2011 2018
Growthindexof%population
byeducationlevel
Primary educational
attainment in developing
countries continues to fall,
as higher education picks up
Primary Secondary Higher
Source: Euromonitor International from International Labour Organisation (ILO)/Eurostat/national statistics/UNCTAD/UN/World Bank
Note: Growth Index 2011=100

9. © Euromonitor International PASSPORT 9ECONOMIES IN 2018
Developing countries making strides in improving business environment
ECONOMIES IN 2018
 India moved 30 places up in the overall ranking in 2018, recording the highest improvement in the index.
This was primarily driven by the Paying Taxes category, in which it climbed 53 places, the highest of all
other categories, thanks to standardising the country’s taxation across all states. In addition, India has also
made it easier to get credit and electricity. The country has adopted 37 reforms since 2003, half of which
have been implemented between 2014 and 2017.
 Nigeria has made substantial improvements in getting credit by relaxing the requirements for collaterals
and making it easier for lenders to access credit history. The time and cost for regulatory compliance has
reduced substantially.
 Indonesia improved 19 places between 2017 and 2018, on account of reforms that reduced the time and
cost of regulatory compliances. The business start-up fee was reduced by 10.9% and access to credit
improved with the establishment of a new credit bureau. Trading Across Borders improved on account of a
new electronic billing system for tax, customs, excise and non-tax revenue, reducing the total time taken to
carry out the relevant procedures.

10. © Euromonitor International PASSPORT 10ECONOMIES IN 2018
China’s New Factories
China aims to continue
refurbishing its manufacturing
sector, emphasising
innovations-based production.
To achieve this, the country
targets to build 100,000
industrial robots annually by
2020.
Adopting 3D printing
2018 will be marked by
widespread acceptance of new
manufacturing practices.
Companies in motor vehicles
and aerospace pioneering will
be integrating 3D printing
technologies.
Digital Business
Revenues from digital
channels will continue to rise.
A significant number of
manufacturers will intensify
application of advanced IT
and digital solutions to
enhance their product
offerings.
Key industrial trends in 2018
ECONOMIES IN 2018

11. © Euromonitor International PASSPORT 11ECONOMIES IN 2018
 2018 will be marked by widespread acceptance of
new manufacturing practices. 3D printing is
expected to be commercialised and business
expenditure on novice machinery and digital
technologies will accelerate across industries and
geographies.
 Business digitalisation will be on the rise in 2018.
B2B companies will be investing more in digital
platforms to sell their goods and an increasing
share of revenue will originate through this
channel. For example, the US manufacturing
industry is expected to acquire 70.0% of its
revenue through online channels in 2018. As a
result, there will be increasing demand for logistics
and transportation services across the globe.
 China’s manufacturing industry is set to start
transforming in 2018. Chinese companies will pour
their resources into innovation, green technologies
and manufacturing automation, which is expected
to tackle rising wages. Future Chinese factories will
be capable of increasingly winning global
competition in the hi-tech, biopharmaceuticals and
aviation industries.
A year of digital technology and automation in manufacturing
ECONOMIES IN 2018

12. © Euromonitor International PASSPORT 12ECONOMIES IN 2018
Sub-Saharan Africa to have the world’s lowest electricity penetration
ECONOMIES IN 2018
Source: Euromonitor International from World Bank
Note: Data is forecast

13. © Euromonitor International PASSPORT 13ECONOMIES IN 2018
 In 2017, Sub-Saharan Africa had the lowest electricity
output per capita in the world, which was low even by the
standards of emerging and developing countries
(approximately one fifth). There will be little improvement
in the situation in 2018, as the region will continue to have
the least number of people with access to electricity, with
rural areas more severely affected.
 A number of projects have been initiated including Power
Africa – a US$7.0 billion plan unveiled by Barak Obama in
2013, with the objective of adding 30,000 megawatts of
electricity by 2030. The Trump Administration is set to
continue the project and likes the public-private
collaboration of the deal, but long bureaucratic processes
and mismanagement in energy systems have proven to
be a challenge so far.
 The African Development Bank, along with various African
governments, is encouraging investments in the energy
sector, while trying to accelerate projects under Power
Africa. At 3.6% year-on-year real GDP growth forecast for
2018, Sub-Saharan Africa will be only second to Asia
Pacific, which is predicted to grow at 5.5% in real terms
during the same period. This is despite the power deficit in
Sub-Saharan Africa and, if its energy crisis was resolved,
the region has the potential to be the next growth hub.
Electricity deficit could become more acute with population growth
ECONOMIES IN 2018

14. FOR FURTHER INSIGHT PLEASE CONTACT
Daniel Solomon
Economist
daniel.solomon@euromonitor.com
Fransua Vytautas Razvadauska
City Analyst
fransua.razvadauskas@euromonitor.com
Indre Cesniene
Head of Industrial
indre.cesniene@euromonitor.com
Oru Mohiuddin
Strategy Analyst
oru.mohiuddin@euromonitor.com

15. © Euromonitor International PASSPORT 15ECONOMIES IN 2018
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