As oil price is strengthening faster, BMI is forecasting a Brent crude average of $73 a barrel in 2018 in place of $67 projected earlier.
The Fitch Group company says Brent will average $77 next year in place of the earlier forecast of $75.
While geopolitical conflicts and financial market dislocations threaten the global growth outlook, BMI continues to see a broadening global economic expansion overall this year. 
“We forecast world real GDP growth of 3.4% in 2018, the same as 2017, decelerating modestly to 3.2% in 2019. However, it is becoming clearer as 2018 progresses that there are a series of key divergences emerging in economic trajectories,” BMI said.
One of those is between the US and the rest of the developed world, and the other is between emerging markets (EMs) with strong macro fundamentals and those EMs that are vulnerable to changing global financial conditions.
Leading indicators increasingly confirm that the US is accelerating while momentum in much of the rest of the world is waning. For the first time since mid-2015, the OECD's (Organisation for Economic Co-operation and Development) composite leading indicators (CLI) show the US' reading surpassing that of Europe and the rest of the OECD, further bolstering the BMI view that US growth is set to accelerate through the rest of the year while the eurozone and other developed countries have already seen growth peak. 
Stronger US growth in both an absolute and relative sense, combined with expansionary fiscal policy from Washington, is pushing US Treasury yields higher, with the benchmark 10-year yield moving decisively through the 3% mark in mid-May to seven-year highs, BMI said. 
“Amid relatively easy monetary policy elsewhere, this is pushing the US dollar higher,” BMI noted.
While BMI has raised its euro exchange rate forecast higher from $1.15 to $1.2 to reflect strength in the first four months of the year, the new projection implies that the euro will average $1.17 over the rest of 2018, below the current spot level.
The combination of a stronger dollar and higher treasury yields has put pressure on emerging markets, highlighted by large selloffs in the Argentine peso, Brazilian real, and Turkish lira, as well as a major deterioration in hard-currency bond spreads, BMI said.
“We continue to believe that while the more vulnerable emerging markets will continue to suffer in this environment, there is little evidence of indiscriminate contagion among investors across the emerging markets space. As such, we have made no major forecast changes to our EM forecasts, and continue to expect broad-based acceleration among emerging markets this year.”
Developed states aggregate real GDP will grow by 2.3% in 2018, equalling the 2017 outturn, before slowing to 2.0% in 2019. That said, despite the steady headline number, the synchronised growth story across developed markets appears to be at an end, as suggested by Q118 real GDP data.
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