Global growth expectations are on the rise and there may be room for more upside surprises. Reflation is becoming synchronised, with non-US economies contributing as much as the US to growth expectations. This marks a reversal from 2016, when the US was the locomotive. The global economic recovery is broadening and there is room for growth forecasts to ratchet higher as reflation gains traction. While some of the enthusiasm over Mr Trump’s policies might have waned, real hard data is likely to accelerate. The five structural headwinds to global growth over the past four years are diminishing – fiscal tightening, the euro crisis, bank deleveraging, the decline in BRIC growth and the collapse in commodity prices, and US and euro area GDP growth may accelerate. The three locomotives of global growth; US, China and Europe, are for the first time since the financial crisis, all contributing to global economic growth. Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes.
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