Global economy likely to decelerate in 2017 and 2018 due to policy tightening, says Danske Bank

In the coming years, the moderate recovery of the world economy is expected to continue. However, we project the synchronised recovery will lose some tailwind going forward; hence, we have revised our forecasts for global growth lower.

Furthermore, policy tightening in China has exceeded market expectations and a clear slowdown in activity is seen there this year.

"Our baseline scenario for the global economy is for more of the same, with the US growing around 2 percent and the euro area growing by just below 2 percent. Although sentiment is improving and political risks in Europe have abated, this is mitigated by a bigger drag on global growth from China, where we expect the economy to decelerate in 2017 and 2018 due to policy tightening," Danske Bank commented in its latest research report.