The year of the pivot

FOR the global economy and markets, the start of 2017 couldn't have been more different from a year ago. Business confidence as well as growth and inflation expectations are once again on the rise in the United States and other major economies. Donald Trump's election in the US appears to have revived "animal spirits" in the world's largest economy.

This is in sharp contrast to early 2016 when lacklustre growth and deflationary pressures called into question the effectiveness of central bank policies across the developed world and cast doubt on the longevity of the global economic expansion since the 2008 financial crisis. We characterise this potential shift as a "pivot".

As business confidence returns, global economic growth is slated to accelerate modestly in 2017. Asia ex-Japan is likely to be the biggest contributor to growth yet again. Consensus estimates forecast 5.7 per cent expansion for Asia ex-Japan in 2017, similar to 2016.