Trumped up?

The world economy looks set to grow more rapidly this year than last. A substantial fiscal stimulus in the US will boost its growth rate, but will have only a limited impact on the rest of the world. With price pressures building in the US but not elsewhere, monetary policy divergence is likely to accelerate, putting further upward pressure on the dollar. We do not expect Trump to carry out his most extreme protectionist threats in his first year in office. And with commodity prices likely to hold up well, aggregate growth in emerging economies is likely to accelerate even though China’s economy will slow gradually.