Global economic growth is projected to hit 2.7 percent this year because of an increase in manufacturing and trade, higher confidence in the economy, stabilized commodity prices, and more positive financing conditions, according to a report from the World Bank.
From 2017 to 2018, global growth is expected to rise even further to 2.9 percent. Emerging markets and developing economies can expect economic growth to increase by 4.1 percent in 2017 and those in advanced economies can expect growth to rise by 1.9 percent.
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"Global trade has gained momentum, following two years of pronounced weakness," the report states. "The upswing is driven by strengthening investment in advanced economies, increased trade flows to and from China, and improved import demand from commodity-exporting emerging market and developing economies."
"The reassuring news is that trade is recovering," said World Bank chief economist Paul Romer. "The concern is that investment remains weak. In response, we are shifting our priorities for lending toward projects that can spur follow-on investment by the private sector."
While the outlook remains positive, restricting trade and disruptions to the financial market could pose risks to further economic growth.
"After a prolonged slowdown, recent acceleration in activity in some of the largest emerging markets is a welcome development for growth in their regions and for the global economy," said World Bank Development Economics Prospects director Ayhan Kose. "Now is the time for emerging market and developing economies to assess their vulnerabilities and strengthen policy buffers against adverse shocks."
The report notes that economies should implement reforms to improve trade, investment, and productivity if they want to increase economic growth.
"Investment in productivity growth in emerging market and developing economies has slowed steadily post-crisis, and reforms will need to accelerate to lift growth prospects," the report states. "Policy priorities include structural measures to improve business climate, to support investment in human and physical capital, and to enhance the regional and global trade integration of emerging market and developing economies."
In the United States, economic growth is expected to hit 2.1 percent in 2017, 2.2 percent in 2018, and then expected to decline to 1.9 percent in 2019. The report says that fiscal policy such as tax cuts and infrastructure programs could help economic growth rise even farther.
"For too long, we’ve seen low growth hold back progress in the fight against poverty, so it is encouraging to see signs that the global economy is gaining firmer footing," said Jim Yong Kim, president of the World Bank Group. "With a fragile but real recovery now underway, countries should seize this moment to undertake institutional and market reforms that can attract private investment to help sustain growth in the long-term."