A pillar of president-elect Trump's economic plan is fiscal stimulus in the form of tax cuts and $500 billion-plus of infrastructure spending.
Trump's victory sparked a rally in the copper price which is seen as a bellwether for metals and industry as a whole thanks to its widespread use in construction, the power sector, manufacturing and transportation.
The World Bank's outlook for the world economy in 2017 released on Tuesday includes a look at the effect accelerating growth in the U.S. could have in the rest of the world and on the commodities sector.
The World Bank predicts that among advanced economies, growth in the United States is expected to pick up to 2.2 percent, as manufacturing and investment growth gain traction after a weak 2016. But if Trump’s stimulus plans are fully implemented, it could lift GDP growth to 2.5 percent this year and to 2.9 percent in 2018.
The World Banks says developments in the U.S. economy, the world’s largest, have effects far beyond its shores and business cycles have been highly synchronized between the U.S., other advanced economies, and emerging markets.
A surge in U.S. growth — whether due to expansionary fiscal policies or for other reasons — could provide a significant boost to growth of the global economy, by up to 0.1 percent in 2017 and by at least 0.3 percent in 2018 provided that no offsetting policies are implemented according to the report.
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Stronger U.S. growth would help global activity by raising U.S. demand for trading partners’ exports. A 1 percent increase in U.S. growth could boost growth after one year by 0.8 percent in other advanced economies, and by 0.6 percent in emerging economies. Related: The Next Big Innovation In Oil & Gas: Cloud Computing
With the rise of large emerging markets, such as China and India, the U.S. impact on commodity markets has diminished over time.
However, the World Bank says that the United States is still the largest consumer of natural gas and oil, accounting for more than one-fifth of global consumption.
The country is also the second largest consumer of a wide range of commodities, including aluminum, copper and lead.
While the bank expects faster expansion in the U.S., commodity-importing emerging market and developing economies, in contrast, should grow at 5.6 percent this year, unchanged from 2016.
China is projected to continue an orderly growth slowdown to a 6.5 percent rate.
By Frik Els via Mining.com
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