Daily Spotlight

Global Growth Outlook Softens a Bit

Global GDP growth continues to decelerate. For 2019, the IMF is now calling for overall global growth of 3.3%, down from 3.6% in 2018 and 3.7% in 2017. These rates are a pick-up from the 3.1%-3.2% growth rates in 2015 and 2016. But the IMF had been looking for 3.9% growth in 2018-19 before its downward revisions. Why the softer outlook? We suspect issues such as trade and tariffs, tighter monetary policy in the U.S. and Europe, sliding commodity prices and geopolitical developments are main factors. 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 4.4%, led by India and China. The industrialized country growth rate is expected to decline this year to 1.8% from 2.1% in 2018. There are risks to this outlook, of course. The UK still does not know how to exit the EU. China and the U.S. are talking trade, which adds volatility. And the Fed remains in tightening mode, at least in the context of its balance-sheet asset sales. 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. ...  country growth rate is expected to decline this year to 1.8% from 2.1% in 2018. There are risks to this outlook, of course. The UK still does not know how to exit the EU. China and the U.S. are talking trade, which adds volatility. And the Fed remains in tightening mode, at least in the context of its balance-sheet asset sales. 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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