Global economic growth hangs by a thread

The global economy got off to an excellent start in 2017. However, there are many factors that can quickly change the positive image. There is therefore a good chance that the rest of the year will be less beautiful than the past few weeks.

The US economy is off to a good start in the new year. Last week it was announced that 227.000 new jobs were added in January. Unemployment rose slightly to 4,8 percent, but that increase was entirely due to people's confidence in the economy and the return to job search. The average salary was 2,5 percent higher than at the beginning of 2016.

Europe is also off to a good start in 2017. The so-called PMI index, which measures the confidence of manufacturing companies, stood at 54,4 in January. That is the same level as in December and it indicates that the business community is quite optimistic about economic developments. Like that of the mainland, the British economy appears to be gearing up for solid growth. A few weeks ago, the IMF raised its growth forecast for the world economy for 2017 from 1,1 to 1,5 percent.

No guarantee
The bad thing is that the good numbers and optimistic outlook offer no guarantee that the good line will be continued in the rest of 2017. There are countless factors that can cloud the positive picture in one fell swoop. In the United States, the dangers are mainly political in nature. For now, it appears that Donald Trump is fulfilling his election promise to put American interests first. Sooner or later, this course threatens to lead to (economic) conflicts with China, Mexico and/or Europe.

In other regions too, the better-than-expected economic figures are always accompanied by concerns about the future. In Great Britain, a setback during the Brexit trajectory could make the better-than-expected growth prospects disappear like snow in the sun. Elections are a major source of uncertainty in mainland Europe. The Netherlands will kick off on 15 March, but the French presidential elections have the potential to have a much greater impact on unity within the eurozone.

Bomb under Europe
Marine Le Pen is running on behalf of the right-wing National Front in the French presidential elections on April 23 and May 7. One of the most important points of that party is the intention to leave the euro with France. With that, Front National would put a bomb under European cooperation. According to polls, Le Pen can count on more than a quarter of the vote, but in a direct ballot, opponents François Fillon and Emmanuel Macron seem to have a small advantage.

However, the unexpected victory of the Brexit camp and Trump's victory in the United States indicate that we should not be blind to polls. Even if the French elections pass without surprises, Greece's weak financial position creates a lot of uncertainty. The German Bundestag elections on September 24 may also cause a political earthquake.

shaky balance
China also remains a potential risk to the global economy. In the summer of 2015 and the first weeks of 2016, a decline in the renminbi orchestrated by the Chinese government already led to panic in financial markets. Since then, the spotlight has shifted to things like Brexit and the appointment of Trump. However, this does not solve China's problems. The government has to balance very carefully when setting the economic course. If the economic policy is too loose, the risk of bubbles will increase sharply, while too tight a course will actually slow down the growth that the country so badly needs.

In addition to the Chinese government, the rest of the financial world also balances on a thin equilibrium cord. This is going well for the time being, but there are many factors that can disrupt the balance. In the coming weeks, the emphasis will be on the publication of economic data. After that, the focus shifts to elections in Europe. That is, if the global economy has not been thrown off balance by an unexpected move by Trump in the meantime.