Although a projected stabilization in energy and commodity prices may lift resource-rich economies up a little next year, the medium-term trend continues to be dominated by weaker growth in key inputs, notably investment and labor supply, the Conference Board said in its Global Economic Outlook 2017.

In the short term, geopolitical tensions, policy uncertainty, financial market volatility, and rapid changes in technology will pin the world economy to a slow-growth path, the report said.

As for the downside risks to the U.S. 2017 growth outlook, the report said a new administration will "face the challenge of managing a dual-speed economy which is largely driven on the plus side by consumer spending, fueled by stronger household balance sheets, and on the minus side by weak business investment."

Asked whether Donald Trump's victory in the U.S. presidential election will significantly change global economic outlook, the group's chief economist for North America, Gad Levanon, said it increases uncertainty but does not alter the bottom-line growth picture as of now.

He said fiscal policy measures such as tax cuts and infrastructure investments may provide some growth upside for the United States in the short term.

"But they're likely to have only a minor impact on an economy that is beginning to reach full capacity and facing the prospect of impending interest rate increases, which may reduce the appetite to invest," he added.

The group believed the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership are almost certainly dead, but new approaches to trade agreements and negotiations might need to evolve.

For other parts of the world, the Euro Area GDP is projected to dip further to 1.4% in 2017, down from 1.5% in 2016.

The UK GDP is forecast to grow only 0.8% in 2017, down from 1.7% this year. For Japan, the figure is estimated to fall to 0.6% next year, from 0.9% in 2016, according to the report.

AMERICAS

United States

The economy grew in the third quarter at the fastest pace in two years, aided by a spike in soybean and other U.S. exports and a rebound in the size of inventories companies keep on hand for sale.

The government said gross domestic product, the official scorecard for the economy, expanded at a 2.9% annual clip from July through September. That’s a marked improvement from the first half of the year when the U.S. grew just barely over 1%.

Economists surveyed by MarketWatch had predicted a 2.9% advance.

The acceleration in growth, along with a steady pace of hiring, is expected to prod the Federal Reserve to raise a key U.S. lending rate in December. Even if the central bank does act, interest rates for all kinds of goods such as mortgages and auto loans are likely to remain quite low for an extended period.

In the third quarter, the economy was buffeted again by diverging forces Consumers increased spending by a moderate 2.1%, exports posted the biggest increase in almost three years and businesses restocked warehouse shelves after a rare decline in inventories in the spring.

Yet higher imports, a second straight decline in how much builders spent to construct new housing and less investment in business equipment tempered results.

“Bottom line, the U.S. economic expansion remains resilient, yet unremarkable,” said Sam Bullard, senior economist at Wells Fargo Securities.

That theme is expected to carry through to the end of the year. Economists polled by MarketWatch forecast a 2.4% increase in GDP in the fourth quarter that runs from October through December.

The driving force behind the improved third-quarter performance was a 10% spike in exports, helped by a temporary boom in U.S. soybean shipments after a poor harvest in South America. Soybeans may have accounted for one-third of GDP growth in the fall, estimates Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Much of that gain could unwind in the fourth quarter, however.

Imports also rose, but by a much smaller 2.3%. A smaller trade deficit boosts GDP.

Firms restocked warehouse shelves in another boost to GDP. The value of inventories rose by $12.6 billion in the third quarter after a $9.5 billion decline in the second quarter.

Businesses also increased investment in structures such as new plants or office space by 5.4% — the largest gain in two years — but spending on equipment was weak again. It fell 2.7% to mark the fourth straight decline.

Consumer spending, which accounts for two-thirds of the economy, grew more modestly in the third quarter after a heady 4.3% gain in the spring that was viewed as unsustainably high. Consumers have powered the economy over the past few years.

Government spending, in a bit of a surprise, rose 0.5%, mostly at the federal level.

Inflation as measured by the PCE price index, meanwhile, rose at a 1.4% annual rate. “Core” inflation climbed at a 1.7% rate if the volatile food and energy categories are stripped out.

Canada

The Canadian economy expanded 0.2% in August, in line with expectations, fueled by a third straight month of growth in the mining, quarrying and oil-and-gas sector.

Canada’s gross domestic product, or the broadest measure of goods and services produced in an economy, rose to 1.68 trillion Canadian dollars ($1.25 trillion) in August from July, according to Statistics Canada. That matched market expectations, according to economists at Royal Bank of Canada.

July’s GDP figure was revised to show growth of 0.4%, down from an earlier estimate of a 0.5% increase, the data agency said. Despite the previous month’s downgrade, the August expansion is likely to bolster expectations for a strong third-quarter rebound after a second-quarter contraction of 1.6%.

The Bank of Canada is expecting Canada’s economy to grow at a 3.2% annualized pace in the third quarter.

The August advance puts the quarter on track to match the central bank’s estimate, Bank of Nova Scotia economist Derek Holt said.

TD Bank economist Brian DePratto said the Canadian economy appears to be getting “back to normal” after several months of uneven growth related to wildfires in northern Alberta earlier this year. He said August could be a preview for the modest pace of expansion that is likely in store for Canada over the longer term.

”Perhaps unexciting, this would be a welcome change from the slow and fairly uneven pace of growth that has been typical of the past 18 months,” Mr. DePratto said in a note.

August growth was led by a 1.4% increase in mining, quarrying and oil and gas extraction. Oil and gas extraction rose 0.9%, as production in northern Alberta’s oil patch returned to normal following wildfires in the region earlier this year, Statistics Canada said.

Over all, the output of the country’s goods-producing industries grew 0.7% in August, while service-producing industries were roughly unchanged.

Utilities rose 2.4%, corresponding with warmer-than-usual weather in much of eastern and central Canada. The manufacturing sector, which policy makers hoped would benefit from a relatively weaker Canadian dollar and U.S. economic growth, was up 0.3% in the month.

The construction sector advanced 0.5%, led by gains in residential building construction. While the overall real estate, rental and leasing sector was roughly unchanged in August, real estate agencies and brokers recorded a 3.2% drop, or their largest monthly decline since January 2015. Activity was notably lower in British Columbia, Statistics Canada said, after a new 15% tax on foreign home buyers came into effect in the city of Vancouver.

Offsetting the August gains were a 0.2% decline in retail sales and a 0.2% drop in the finance and insurance sector, the data agency said.

The August GDP data come two weeks after the Bank of Canada kept its policy rate unchanged at 0.5% and lowered its economic outlook on weaker-than-expected investment levels and non-resource exports. The central bank now expects growth of just 1.1% this year, followed by an increase to 2.0% in both 2017 and 2018.

ASIA

Japan

Japan’s economic growth handily beat expectations in the July-September period, expanding for a third straight quarter as exports recovered, but weak domestic activity cast doubt on hopes for a sustainable economic recovery.

Government data underscored a potentially fragile export-reliant economic recovery just as Republican Donald Trump’s shock victory in the U.S. presidential election was adding to uncertainty over the global economic outlook.

The economy expanded by an annualized 2.2% in the third quarter, faster than the 0.9% increase markets had expected, following a 0.7% increase in April-June, Cabinet Office data showed on Monday.

It marked the third straight quarter of expansion.

“Exports recovered, but private consumption and capital expenditure are weak. The economy isn’t as strong as the 2.2% makes it seem,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

“There are risks from China and Trump’s trade policies. We need to continue to pay attention to downside risks,” Tokuda said, echoing the concerns of policymakers.

The preliminary reading for gross domestic product (GDP) translated into a quarterly expansion of 0.5% in the third quarter, versus a 0.2% gain expected by economists.

External demand – or exports minus imports – added 0.5 percentage point to GDP, due to a bounce in exports from the prior quarter, and falling imports caused by yen gains, oil price declines and weak domestic demand.

It marked the biggest contribution since April-June 2014 as exports grew 2.0%, the fastest gain in a year, helped by potentially one-off factors such as a boost in shipments of smartphone parts.

Private consumption, which accounts for roughly 60% of GDP, rose 0.1%, unchanged from the second quarter, partly as typhoons and bad weather undermined consumer spending. It adds to concerns that the benefits of Prime Minister Shinzo Abe’s Abenomics stimulus drive are yet to spread to households – as seen in tepid annual wage rises.

“Some weakness can be seen in the current economy, but employment and wages are continuing to improve and moderate economic recovery is continuing,” Economy Minister Nobuteru Ishihara said in a statement.

“Economic downturns in China and emerging markets in Asia are downside risks to our country’s economy. We need to pay attention to these risks as well as to uncertainties in the global economy and fluctuations in financial markets.”

Capital expenditure, a key component of GDP, was flat, following a 0.1% decline in the second quarter, with worries about the global outlook and renewed yen gains weighing on business investment.

Underlining flagging inflation, the GDP deflator fell 0.1% in July-September from the same quarter a year ago, the first annual decline since October-December 2013, the data showed.

Philippines

The Philippine economy grew 7.1 percent in the third quarter from a year ago, supported by growth in the services, industry and farm sectors. Annual growth in the second quarter was 7.0%.

Economists polled by Reuters had forecast the economy would expand an annual 6.7% in the September quarter, while the government had expected growth in the 6.3-7.3% range.

Singapore

The Ministry of Trade and Industry (MTI) will release the third quarter economic survey of Singapore.

The report will give the final growth figures for the economy for the July-September quarter, including detailed information on sectoral performance, sources of growth, inflation, employment and productivity.

The advance estimate of third quarter gross domestic product (GDP) released on Oct 14 showed Singapore's economy grew a meagre 0.6% from a year ago, sharply lower than economists' median forecast of 1.7% growth.

Compared to the previous quarter, the economy contracted by 4.1%, the biggest slump since 2012.

Since then, MAS forecasters have downgraded their economic projections for this year and next, expecting 2016 growth to come in at the lower end of their 1 to 2% forecast, and "only slightly higher" in 2017.

South Korea

Samsung’s Note 7 crisis and Hyundai’s worst-ever strikes nearly wiped out a rise in factory output.

South Korea’s economic growth is expected to hit the central bank’s 2.7% forecast this year, with third quarter GDP data showing the economy would have grown faster were it not for the setbacks suffered by Samsung Electronics SSNLF -12.28% and Hyundai Motor HYMTF -1.31% .

“When you take away the effects from Samsung and Hyundai, third-quarter growth was considerably better than expected,” said Chung Kyu-il, a director at the Bank of Korea, although he did not give a figure for the amount of growth lost.

Gross domestic product rose a seasonally adjusted 0.7% over July-September versus the second quarter, the Bank of Korea estimated, ticking down from a 0.8% quarterly rise.

With growth on track, the central bank is more likely to observe than act on monetary policy while looking out for a pending U.S. Federal Reserve rate hike expected by year-end.

Chung added that fourth quarter growth will also be affected by Samsung’s decision to drop its fire-prone Galaxy Note 7 smartphone, although the economic impact from lost manufacturing was nearly all reflected in the third quarter.

Manufacturing overall fell 1.0% in the third quarter, with Samsung’s smartphone crisis and the worst-ever strikes at Hyundai Motor nearly wiping out the second quarter’s 1.2% rise in factory output.

Despite the strikes ending, there will not be an immediate jump in manufacturing in the fourth quarter, BOK director Chung said, although the bank’s forecast will be achievable as long as sequential GDP growth hits 0.1% or higher next quarter.

ING economist Tim Condon said calls for monetary easing may shift to seek fiscal expansion as central bank rate cuts have resulted in heavy household debt growth, reduced consumption, and inventories piling up at manufacturers.

Most analysts see another rate cut early next year, but Kim Doo-un at Hana Financial Investment said today’s data would encourage the central bank to keep rates on hold in the near term.

The median forecast in a Reuters survey of 19 analysts was for South Korea to post growth of 0.6% in the third quarter in sequential terms.

In annual terms, GDP rose 2.7% in the third quarter, down from a 3.3% rise in the second quarter and marking its slowest growth since April-June of 2015.

Construction investment saved Q3 growth as expected, rising 3.9% in sequential terms and picking up from 3.1% growth in the June quarter. Construction jumped 4.4% over the same period, speeding up from a 1% gain in the second quarter.

Services rose 1% in the September quarter from the previous three-month period, also better than a 0.6% gain in the second quarter, thanks largely to government efforts to launch nationwide retail sale events to pry open wallets.

Capital investment slipped 0.1%, down from 2.8% growth in the previous quarter.

The Bank of Korea cut its policy interest rate by 25 basis to 1.25% in June, its eighth cut since starting this easing cycle in mid-2012. The government has been churning out supplementary budgets nearly every year since then to help keep the economy afloat.

EUROPE / AFRICA / MIDDLE EAST

Europe

A slow but constant growth of GDP has been noticeable over the last three months in all of Europe, showed Eurostat data.

For the first time in years, not even a single economy reported a decrease in GDP.

On the contrary, all economies marked growth of between 0.1% and 0.8%, compared to the second quarter of 2016.

The data showed that Bulgaria and Portugal were the best performing economies with 0.8% growth of GDP, followed by Cyprus, Holland, Slovakia and Spain with 0.7%.

German and French growth slowed down to 0.2%, while that of the UK increased to 0.5%.

Belarus

Belarus’s president has said the country’s gross domestic product (GDP) will decline by 2% for 2016.

President Alyaksandr Lukashenka said in Minsk that he expects the economy to grow in 2017.

Belarus’s GDP declined 3.9% in 2015. The Eurasian Development Bank has forecast a decline of 2.6% for 2016, while the International Monetary Fund predicts a 3% fall.

Lukashenka also told reporters he plans to meet with Russian President Vladimir Putin in late November. Earlier, Moscow announced a planned visit by Lukashenka toward the end of the month.

Lukashenka said "lots of problems" were complicating relations with Moscow.

"Regrettably, nothing new has been done [in 2016]," he said. "Negative aspects outweigh [the positive]."

He added, however, that Minsk and Moscow must "present a united front" to defend their interests in the international arena.

Germany

German GDP data for the third quarter of 2016 came in below expectations.

The economy only rose at a 0.2% rate between June and September, which was well below the 0.4% forecast, and lower than the relatively high 0.4% in the previous quarter.

The Q3 result showed a yearly growth rate of 1.5%, which was well below the 3.1% of the previous Q3.

Positive results came mainly from the domestic quarter whilst a slowdown in exports was the main source of weakness.

“The main drag came from the external sector with rising imports and shrinking exports. This is consistent with our analysis which suggest a slow but persistent slowdown in UK demand for German exports partially accounted for by EURGBP strength,” says Olga Tschekassin at Barclays.

Although the outlook for German growth in Q4 is better than it was for Q3, Barclays' caution against getting too optimistic.

Whilst sentiment and survey data remain strong, with positive results in the ZEW survey of financial professionals (which rose 7.6 in November) and the Ifo Business confidence survey, survey data is not as accurate a predictor as ‘hard’ economic data.

Fears that the weak pound will continue to exert a negative demand effect on German exports to the UK will continue to act as a headwind against growth in the heavily export-dominated German export economy.

The significance of the UK as a market for German exports should not be underestimated.

“Our analysis suggests that the current account exposure of Germany to the UK, mostly via trade, has risen to a staggering 1.7% of German GDP, or 20% of Germany’s overall current account surplus,” says Tchekassin.

The significance is particularly marked in the automobile sector, where the UK accounts for 13% of German exports.

“At product level, road vehicles are by far the largest export group with the product balance surplus amounting to EUR25bn – approximately 50% of the bilateral goods trade surplus.

“13% of all German road vehicle exports went to the UK in 2015, which means that the UK is a major market for the German automotive sector,” said the Barclays report.

Based on Barclays' economic forecasts, that the UK will sustain a 7.6% decline in investment in 2017 due to uncertainty around the triggering of Article 50.

The impact of such a scenario, “would additionally diminish the demand for German investment goods exports and have a significant negative effect on German GDP growth,” says Barclays' Olga Tchekassin.

To conclude, the impact on the German economy of Brexit is likely to be equal to a substantial headwind to growth.

Much of the extent of the damage will be dictated by the GBP/EUR exchange rate, which if it rises to 1.25, will help mitigate the ill effects of Brexit on German exports substantially.

However, given the risk of political uncertainty in the Eurozone and the rise of the right during a year with many elections in key Eurozone states, there is a good chance the exchange rate could remain subdued at around 1.15.

As such, given an average exchange rate of 1.1500 for GBP/EUR (current level 1.1577) during 2017, the combination of the persistently weak Pound and the fall in investment in the UK would have a serious negative effect on German base-line GDP growth of 0.7%.

“Econometric evidence suggests, in our baseline scenario (assuming UK domestic demand stagnation and GBPEUR of 1.15), that this would reduce to about 1%, and hence mechanically reduce German GDP by about 0.7%, by the end of 2017. Brexit is therefore not likely to leave Germany, and the euro area, unharmed,” ended the Barclays report.

This is important dynamic to consider when heading into Brexit negotiations and it could help explain this week's softening rhetoric on the issue of immigration and single market access by German Chancellor Merkel.

Ireland

A British exit from the European Union that left trade with the bloc governed by World Trade Organization rules would knock around 3.5% off Ireland’s gross domestic product within a decade, an Irish government report estimated on Monday.

Ireland is widely seen as the EU economy with most to lose from Brexit and the government has cut its economic growth forecasts for 2016 and 2017 by 0.7 and 0.4 percentage points as a result of Britain’s June vote to leave.

The report by the Department of Finance and the Economic and Social Research Institute estimated that a “hard Brexit” under WTO rules would leave Ireland’s unemployment rate 1.9 percentage points higher and wages 3.6% lower within a decade than if Britain did not leave.

A “soft Brexit” that left Britain within the tariff-free European Economic Area alongside Norway and Iceland would leave Irish GDP just over 2% lower a decade after the exit than it would have been had Britain stayed in the EU.

The authors of the report, which relied on models produced by Britain’s National Institute of Economic and Social Research, said the hit to Ireland’s economy could be worse than that to Britain under certain scenarios.

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