Good Times Ahead for the World Economy? The IMF Thinks So

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Good news, it appears, at least according to the normally gloomy International Monetary Fund, that the global economy is heading up. Landon Thomas Jr. in his New York Times article, "I.M.F. Raises 2017 Outlook for Global Economic Growth", tells us that "numerous indicators, including export growth in Asia and soaring demand for container ships, show that global trade is bouncing back."

Frankly, there has been so much doom and gloom lately around retail sales (see "Is the Toy Industry in Trouble? I Don't Think So"), that it was a relief and a surprise to read the good news. 

And the good news seems to be pretty spread out. The IMF predicts:

  • The U.S. United States economy is now projected to be up 2.3% in 2017 and 2.5% in 2018. It grew at only 1.6% in 2016.
  • Global trade will be up 3.8% in 2017 and 3.9% in 2018.
  • Developing nations will be up 4.5% in 2017 and plus 4.8% in 2018.

What is the driver behind all of this? According to the IMF, its China. That country's imports are reportedly up 20%. 

Is this good for the toy and play industry? I think the answer is "mostly yes". Here's why:

  • The toy and play industry is largely a global, export / import business. What is good for global trade is therefore good for the industry. 
  • China's surging domestic economy is good news. There are 1,388,062,080 people currently living in China. That is roughly 4.5 times the U.S. population. With the "one child policy" ending and a domestic consumerist economy developing rapidly, toy companies need to be not just be manufacturing in China but selling to China.
  • Container ship demand is up. This follows some shipping company bankruptcies and mergers in 2016 which resulted from a drop off in demand. The good news is that companies are shipping goods. The not so good news for the toy industry is therefore that ocean freight costs are probably going to rise.

 Bottom line, it looks like the global economy, despite worries about protectionism, is surging ahead. Let's hope that it keeps heading in that direction.

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