Daily Spotlight

Global Growth Outlook Dims

According to the IMF, global GDP growth continues to decelerate. For 2019, the agency is now calling for overall global growth of 3.0%, down from 3.6% in 2018 and 3.7% in 2017. These rates had been a pick-up from the 3.1%-3.2% growth rates in 2015 and 2016. Initially, the IMF was looking for 3.9% growth in 2019 before its downward revisions commenced last October. The 3.0% outlook for 2019 is now the slowest growth since the global recession of 2008-2009. We suspect issues such as trade, Brexit and geopolitical developments are the main factors. Next year is supposed to be better, with a preliminary outlook of 3.4%. Emerging markets are expected to drive growth over the next two years; forecasts for this segment of the global economy call for expansion at a rate of 4.6%, led by India and China. The industrialized country growth rate is expected to decline this year to 1.7% from 2.3% in 2018. There are risks to this outlook, of course. The UK still does not know how to exit the EU, and China and the U.S. are still talking trade, which adds volatility to global stock markets. At least the Federal Reserve has reversed course and has been cutting rates in 2019. The weak global outlook has resulted in strength in the U.S. dollar, which could be a further headwind to companies reliant on export sales. ...  geopolitical developments are the main factors. Next year is supposed to be better, with a preliminary outlook of 3.4%. Emerging markets are expected to drive growth over the next two years; forecasts for this segment of the global economy call for expansion at a rate of 4.6%, led by India and China. The industrialized country growth rate is expected to decline this year to 1.7% from 2.3% in 2018. There are risks to this outlook, of course. The UK still does not know how to exit the EU, and China and the U.S. are still talking trade, which adds volatility to global stock markets. At least the Federal Reserve has reversed course and has been cutting rates in 2019. The weak global outlook has resulted in strength in the U.S. dollar, which could be a further headwind to companies reliant on export sales.   more

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