Underlying Economic Conditions
Economists project that the world economy will continue to expand in 2019, though it is navigating rough seas. They predict that the upturn will continue, but at a reduced pace. The main risks stem from global trade tensions, especially between the world’s two largest economies – the USA and China. Higher bilateral tariffs could slow trade and investment further. Additional pressure comes from geopolitical crises and political uncertainties such as the outcome of Brexit. Tighter monetary policies by the major central banks also have the potential to inhibit growth going forward. In addition, a number of emerging and developing countries are contending with rising financing difficulties as borrowing becomes more expensive.
The OECD estimates that global GDP growth has peaked – and will slow from 3.7 percent in 2018 to 3.5 percent in both 2019 and 2020. According to the IMF, the main drivers of growth are emerging markets at 4.5 percent. But momentum there, say the Fund’s analysts, will also slow in the coming years. In advanced economies, economic output is expected to rise by 2.0 percent in 2019. The economy in the USA is forecast to grow by 2.5 percent (2018: 2.9 percent). For China, the Asian Development Bank projects growth of 6.3 percent in the coming year – after 6.6 percent in 2018. India’s growth, on the other hand, is expected to climb further.
Given the latest economic projections, our 2019 scenario is for the world economy to continue to expand. For 2020, we anticipate similar growth.