Trump infrastructure bump forecast for global economy

During his campaign Donald Trump promised to push through a $500 billion spending program to build bridges, roads, railways, schools and hospitals early next year. The president elect also has aspirations of $1 trillion in infrastructure build-out in the US over the next decade.

"Well targeted public spending initiatives could catalyse private economic activity and help to get the global economy out of the low-growth trap"

The US will join other countries with a focus on fiscal policy as options for further monetary easing dwindles in developed markets. Canada's Prime Minister Justin Trudeau announced a $50 billion infrastructure program shortly after taking office last year, while the UK last week also announced modest plans to give its post-Brexit economy a boost. China is in the midst of a three-year $720 billion transport build-out program and the Asian country already spends more on infrastructure than Europe and the US combined.

Trump's surprise victory gave a further boost to industrial metals (none more so than copper) and steelmaking raw materials already on an upward curve this year. While skepticism and uncertainty about Trump's economic plans abound, the influential Organisation for Economic Co-operation and Development on Monday gave its enthusiastic backing to fiscal stimulus for the world's largest economy.

“The global economy has the prospect of modestly higher growth, after five years of disappointingly weak outcomes,” OECD Secretary-General Angel Gurría said at the launch of the international organization's global economic outlook:

“In light of the current context of low interest rates, policymakers have a unique window of opportunity to make more active use of fiscal levers to boost growth and reduce inequality without compromising debt levels. We urge them to do so,” Mr Gurría said.

The OECD says "well targeted public spending initiatives could catalyse private economic activity and help to get the global economy out of the low-growth trap."

Trump infrastructure bump for global economy forecast

Source: OECD

According to the report the ongoing or projected shift in the fiscal stance in a number of major economies accounts for much of the modest increase in global growth to 3.3% in 2017 and 3.6% in 2018.

Among the major advanced economies, activity is expected to accelerate in the United States, due to an assumed easing of fiscal policy, with the economy projected to grow by 2.3% in 2017 and 3% in 2018.

SEE ALSO: Trump's $500 billion will do little for global mining