Charles Sylvester of Charles Stanley & Co looks back at a better-than-expected 2017 – but says recent events have seen the euphoria fade.

It looked as though 2017 was the year that the world economy finally shook off its post-crisis hangover.

The latest figures show that it expanded by 3.8%, the fastest pace since 2011. However in the past month or so, the euphoria appears to have faded somewhat.

In April, the International Monetary Fund (IMF) acclaimed the recovery as being broad and strong whereas in the first quarter of this year growth actually slowed in all major economies; in fact in Japan, it even dipped below zero.

One of the main problems is Europe, or the Eurozone in particular. Until recently investors were worrying about political problems that never materialized, but ended up being surprised by the strength of economic growth. Now it would appear to be the opposite. Economically there have been very few surprises on the upside, while political problems appear to be mounting up.

Recent developments in Italy, the Eurozone’s third largest economy, are now the centre of attention, and affect confidence across the whole bloc.

The potential government’s policies are likely to bring them in direct conflict with the European Central Bank, and Germany in particular. However, their lavish spending plans, if they remain in the Euro, depend crucially on investors actually lending them the money.

Across the pond, President Trump has put the cat among the pigeons by initiating trade tariffs and threatening all-out trade war.

But with mid-term elections coming up, and markets not likely to react very favourably to an escalation on this front, we might see Trump pull back a wee bit from this sort of brinkmanship.