Kuwait: November 9, 2017
INTERNATIONAL: GLOBAL GROWTH PROSPECTS IMPROVE, WHILE INFLATION REMAINS SOFT
As the outlook for global growth continued to improve, central banks in advanced economies proceeded with policy normalization despite persistently soft inflation. Economic activity appeared more robust in recent months across most major economies, particularly in the US and the Eurozone. In the US, growth was bolstered by the promise of a fiscal boost from the GOP’s planned tax cuts. As a result, equities continued to record new highs. Yet, despite the robust growth, inflation has failed to gain further momentum in recent months. The softer inflation has not, however, derailed or changed central banks’ normalization plans.
Global equities remain in the green, posting a gain of 2.0% in October, as measured by the MSCI All Country World Index. US equities continue their positive streak for the seventh month, up 2.2% and 4.3% for the S&P 500 and Dow Jones, respectively. The progress of President Trump’s tax plan contributed to US equity markets reaching new highs. The tax plan could potentially boost economic growth as well as widen the fiscal deficit. Following the FOMC meeting last week, the Federal Reserve did not raise rates, yet upgraded economic activity from “rising moderately” to “rising at a solid rate”, further supporting a December rate hike.