OPEC Monthly Oil Market Report – October 2017
Ongoing positive momentum in 2H17 OECD growth, coming after a better-than-expected 1H17 output, as
well as the potential tax reform in the US in 2018, the ongoing growth dynamic in the Euro-zone (and to
some extent in Japan), solid growth in China and India, and an improving situation in Russia are all lifting the
global growth forecast to 3.6% in 2017 and 3.5% in 2018.
The OECD’s GDP growth in 2017 remained at a solid level of 2.2%, while its 2018 GDP growth forecast was
revised up to 2.1% from 2.0%. This uptick was mainly supported by expectations of an ongoing strong
growth dynamic in the Euro-zone and the US in the coming year, the latter of which will gain further support
from the underlying growth dynamic through a potential tax cut. In emerging economies, China’s growth will
slow somewhat in 2018 but remains considerable and has been better than expected so far in 2017. India’s
growth will pick up again in the coming year supported by ongoing reforms. Brazil and Russia’s recovery will
continue in 2018, with Russia’s growth having been lifted to 1.8% in 2017 and 1.6% in 2018.
Geopolitical developments and the pace of monetary policy normalisation, particularly in the US and the
Euro-zone, will be aspects that will need close monitoring. Seemingly high valuations in equity and bond
markets, combined with low volatility, are another risk at a time when central banks have become more
willing to reduce monetary stimulus measures. Debt levels also remain high in some key economies. Stability
in the oil market remains a key determinant for global economic growth as well.
Table 3 - 1: Economic growth rate and revision, 2017-2018*, %
Underlying growth in the US is solid and most indicators point at a continuation of the current dynamic. The
most recently published tax framework, which proposes simplifying the tax code along with lower corporate
taxes and other reforms, may lift growth further in the coming year. The positive momentum has also been
supported by improvements in the labour market, another positive aspect that was pushing up private
household consumption. Importantly, the Federal Reserve (Fed) also acknowledged the improvements and
highlighted that the normalisation of interest rates should not move forward too gradually since inflation may
also be affected by this development.
In its third and final estimate,
US GDP growth
in 2Q17 was revised up to a considerable level of 3.1% q-o-q
at a seasonally adjusted annualised rate (SAAR) after a previous estimate of 3.0% q-o-q SAAR and a first
estimate of 2.6% q-o-q SAAR. The main driver for the strong number was personal household consumption,
which expanded by 3.3% q-o-q SAAR, the outcome also of a considerably strengthening labour market.
Exports rose by 3.5% q-o-q SAAR, after rising by 7.3% q-o-q SAAR in 1Q17, a development that was also
positively impacted by the weakening of the US dollar in the 2Q17 and the 3Q17. Investments continued to
World OECD US Japan
zone UK China India Brazil Russia
3.6 2.2 2.1 1.6 2.2 1.5 6.7 6.9 0.5 1.8
Change from previous month
0.1 0.0 0.0 0.2 0.1 0.0 0.0 0.0 0.0 0.3
3.5 2.1 2.3 1.2 1.9 1.4 6.3 7.5 1.5 1.6
Change from previous month
0.1 0.1 0.1 0.0 0.1 0.0 0.0 0.0 0.0 0.2
Note: * 2017 and 2018 = Forecast.
Source: OPEC Secretariat.