- Strong global momentum continues in 1Q18 driven by trade, despite some weaker data in DM at the beginning of the year
- World GDP growth in 1Q18 could pick up slightly to rates observed over the last year. Our BBVA-GAIN model estimates global GDP to grow at 1% QoQ, up from 0.9% in 4Q17.
- Global exports strengthened significantly again in February, after the moderation at the end of 2017. Widespread export growth across the board continues benefiting from the ongoing recovery in the industrial sector and investment.
- But both industrial output and retail sales in DM were modest in early 2018, suggesting some moderation in domestic demand. In contrast, resilient activity in China is pulling industrial production in EM, while a gradual recovery in retail trade proceeds in Latam.
- Confidence remains at high levels in 1Q18 so far, but showing some signs of moderation.
Manufacturing PMIs declined in larger DM (US, EZ, Japan and UK) in February and services
PMIs also, except in US where service sentiment rebounded. In EM, PMIs survey improved.
- Core inflation has increased only very gradually across the board in recent months, but
surveys suggest that inflationary pressures are building up across areas and sectors.