Advanced economy growth may boost global GDP even longer, Oxford Economics says

Oxford Economics predicts advanced economies such as the USA, Eurozone, Japan, UK, Canada, Australia and Switzerland, will give global GDP a larger than expected boost this year.

Nonetheless, it had been China that played a key role in driving the improvement in world GDP over the twelve months leading to October 2017, according to Oxford Economics director of global macroeconomic research, Ben May. But now the expansion in advanced economies appeared to be more self-sustained, he said.

The independent advisory firm had revised its global GDP forecast for 2017 from 2.6% to 2.9%, alongside improved consensus forecasts, and now they believed the "soild performance" seen in the first half of 2017 might extend into the backhalf and even beyond.

More specifically, May raised his projection for China and advanced economies by 0.5%, and Japan, the Eurozone and Canada also saw particularly large revisions.

Export growth was considered to be the main factor behind the upturn in advanced economies, but domestic demand and employment within those same economies also saw increases over the year, with strong job growth expected to continue to support household spending in the immediate future.

That led May to conclude that a previous forecast that advanced economies were "either close to or beyond cyclical peak" might turn out to be "too cautious".

Yes, the possibility did exist that the recovery would lose momentum were central banks to normalise monetary policy quicker than anticipated in response to the stronger readings on the economy.

Yet the analyst deemed that scenario unlikely in the near-term, given how wages and inflation across advanced economies were rising more slowly than expected.

The report closed by saying that a return to the "NICE" (non-inflationary, constantly expansionary) practices of the 1990s "may be too much to hope for," but predicted an extended period of strong growth with weak inflation in advanced economies "could be on the cards," as global economic risks fade - despite the heightened geopolitical tensions.