The survey evidence has strengthened considerably in recent months and even though fourth-quarter GDP growth will probably fall back to 2.2% annualised, as the third-quarter spike in exports is reversed, the outlook for 2017 is encouraging. Assuming a major fiscal stimulus is passed in the first half of next year, which is our baseline scenario, we anticipate that GDP growth will accelerate to 2.7% for next year as a whole. The quicker the stimulus is passed, however, the quicker the temporary boost to incomes and spending from lower taxes will fade. We then expect GDP growth to slow again to 2.2% in 2018 and there is a real possibility of a severe slowdown or even a mild recession in 2019.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services