World growth should come in at between 3% – 4% for 2018. The U.S., the world’s largest economy will outperform most regions. In the last two quarters it has grown at 3%, and, with full employment can make a significant improvement to world growth. Asia is also increasing with the China worries subsiding for the present. Japan is embarked on a policy of growth stimulation, and, for the first time is achieving growth. India looks like being the bright spot with the Modi government making a re- attempt to introduce changes in business practice and monetary and fiscal measures. Europe continues to surprise to the upside with unemployment falling for most countries.
While all Central banks are worried about deflation the U.S. and U.K. have begun to reverse QE, and, interest rates continue on an upward cycle. Europe for the moment continues to hold rates, and, this will probably continue into mid to late 2018.
European countries have started to grow in 2017. The continued support of the ECB and Mario Draghi’s emphases on continuing Quantitative Easing should see Europe continue to grow for the next 2 years.
Ireland continues to grow at one of the fastest rates in Europe – with growth expected at 4% in 2018 against 5% in 2017. Foreign direct investment continues to flow to the country, and, unemployment is dropping and approaching full employment. Government, however, needs to be active on the housing and personal tax fronts to retain the highly educated young work force. It continues to be still extremely difficult to get people with skills to return from Australia, the U.K., U.S.A and Canada given the current tax rate applying. In addition, interest rates while low in historical terms are high in comparison with our European partners. The government takes a view that banks need to be “returned” to profitability and in such that they are sacrificing the Farming and business community.
Brexit continues to be a major uncertainty for Ireland. Discussions to date, to say the least, are slow moving. The implications of this are many, and will impact on Ireland more than any European country. On the positive side Irish exporters are looking to the U.S.A. and Asia that has growth markets and this may compensate for the decline in U.K. exports.
Top Investment for 2018
Property is the stand out investment opportunity for 2018. In particular, commercial returns will outperform deposits and bond yields. Rent has continued to increase as new builds continue to lag behind market demands.