CDF Annual Report 2017

The global economy strengthened in 2017, reaching a growth rate of 3.8 per cent, largely on account of an expansion in global trade. This recovery was led by increased investment in advanced economies, strong growth in emerging Europe and emerging
Asia, as well as renewed growth in many commodity exporting countries. In many emerging markets and developing countries growth was largely driven by private consumption, while the commodity exporters in this group were also able to boost investment.  Consumer price inflation increased somewhat in many advanced economies, reflecting the pick-up in oil prices towards the end of the year but core inflation, which excludes energy and food prices, remained low.

In spite of the rebound in economic growth in the advanced economies, the US financial markets displayed some signs of instability, similar to the situation eleven years before, just prior to the economy sinking and extending into a deep global recession.  On this occasion instead of households using cheap debt to take cash out of their overvalued homes the cause lay with large corporations using cheap debt to transfer huge dividends to their shareholders. The potential risk in this case was that an inflated bubble of corporate stocks and bonds could burst and send the economy into another recession.

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