The world’s economy matters to investors, analysts and policymakers—and the advance release of GDP growth data is almost always followed by a market reaction. However, the GDP number tells only part of the story. A deeper look into the numbers shows how countries’ productivity is evolving and helps identify underlying economic dynamics.
The components of GDP are C (consumer spending), I (investment) and X (exports). The C component captures the value of all final goods and services produced within the economy during an accounting year. This includes expenditures on consumption, investment and government spending, but excludes any transfers or subsidies that are a part of a country’s social welfare program. The I component includes corporate profits and inventories, which are not included in consumer spending, but which are a key driver of GDP. The X component represents the value of gross exports, a measure of a country’s competitiveness. The underlying data for these estimates come from the International Monetary Fund and the Organization for Economic Co-operation and Development, among other sources.
Our global GDP growth forecast remains upbeat despite escalating trade tensions, elevated uncertainty and deteriorating financial conditions in some advanced economies. We expect a return to more normalized levels of output as the impact from higher tariffs and other policy uncertainties dissipate. Meanwhile, a global rebound in commodity prices and a de-escalation of armed conflicts should help push up output this year and next. Inflation is expected to fall toward target, while a recovery in productivity growth should support employment and wage gains.
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