Annual global economic growth is forecast to decelerate to 3.5 per cent in 2019 and 2020, down from 3.7 per cent in 2018, said London-based Euromonitor International, a global market research company in a new report.
This deterioration in its global outlook has primarily been a result of downgrades to the advanced economies, including the US and the Eurozone, but also to some emerging economies such as Mexico and Russia, according to the report titled “Global Economic Forecasts Q1 2019”.
The real GDP in advanced economies is estimated to grow by 2.0 per cent in 2019 and 1.7 per cent in 2020, a decline from 2.3 per cent growth in 2018. Emerging economies are anticipated to see a steadier real GDP growth of 4.6 per cent in 2019 and 4.7 per cent in 2020, which is similar to a pace of 4.6 per cent in 2018.
The world trade growth is likely to weaken in 2019 as a result of a pullback in globalisation and increasing political risks, the report said.
The recent decline in financial asset prices also suggests a risk of recession in 2019. Major global risks are stemming from remaining trade war uncertainty, tightening financial conditions and risks of a worse-than-expected Chinese economic slowdown.
The Eurozone outlook is also clouded by a possibility of a no-deal Brexit and Italian fiscal policy. Lower oil prices and the emergence of populist leaders in Latin America could further weigh on the outlook of emerging economies.
Major forecast revisions
Worsening trade and political uncertainty along with a more transitory impact of tax cuts has led Euromonitor International to reduce the US real GDP growth forecast to 2.4 per cent in 2019 and 1.7 per cent in 2020, it said in the report.
Negative readings at the end of 2018 have led to downgrades in the Eurozone outlook, with the economy slowing close to long-term trend growth. Real GDP is to grow by 1.7 per cent in 2019 and 1.6 per cent in 2020.
The UK outlook remains under severe Brexit uncertainty. “We have kept our baseline real GDP growth at 1.5 per cent in 2019 and 1.4 per cent in 2020. However, the baseline is just one of several possible scenarios,” Euromonitor International said.
Slowing global demand and the China-US trade war continue to take a toll on Japan’s economy, GDP growth declined in Q3. Euromonitor International has reduced real GDP growth to 0.6 per cent in 2019 and 0.6 per cent again in 2020.
China is facing growing concerns about a domestic demand slowdown and the impact from the US-China trade war. “We have for now kept GDP growth forecasts at 6.1 per cent in 2019 and 5.9 per cent in 2020,” the report said.
Brazil’s business confidence has jumped on the new president’s reform agenda. While waiting for the government’s actions, Euromonitor’s real GDP growth forecast is unchanged at 2.2 per cent in 2019, 2.4 per cent in 2020.
Russia’s economic growth will be weighed down by slowing exports, weak domestic demand and decreasing oil prices. Euromonitor International has cut the real GDP growth forecast to 1.3–1.4 per cent in 2019-2020.
India’s economy decelerated slightly in Q3 2018, dragged down by private consumption and net exports. Euromonitor International has reduced real GDP growth forecasts to 7.4 per cent in 2019 and 7.5 per cent in 2020.