Global economy growth loses momentum slowing down to the weakest pace since the Great recession in 2007-2008. Although the are some signs of potential recovery at the end of 2019 uncertainties in trade policies, low public and private investments, and crumbling multilateral order makes sustainable growth fragile.
The Organization of Economic Cooperation and Development (OECD) has notched its outlook from estimated 3% in 2020 to 2,9%. Forecast for Global GDP growth for 2019 remain unchanged at 2.9%.
OECD sees world trade slumping to 1.2% in 2019 and 1.6% in 2020, down from 2.1% and 3.1% respectively from previous estimations in May 2019.
In euro area growth is seen at 1.2% in 2019 down from 1.9% in 2018. A modest 1.1% GDP increase in 2020 expected to rebound in 2021 with 1.2%. US economy losing its gains from fiscal stimulus in 2017 amid weakening of its major trading partners and trade tensions. US GDP projected up in 2019 by 2.3%, trimmed from 2.4% in September with a further slowing down to 2% in 2020 and 1.98% in 2021. China’s real GDP expected to slide at 6.16% in 2019 and further down to 5.73% and 5.5% in 2020 and 2021 respectively.
The background for deterioration of economic growth likely bears political ambitions and governments’ reluctance to address structural challenges in timely manner. China challenge US dominance as the largest world economy as well as its world political leadership. Harsh US actions to preserve the ultimate position by imposing unfair and uneven cooperation with its trading and political partners provokes tensions and disrupts existing supply chains. A structural change in trade, capital flows, debt are seen developing but still in infancy.
Yet the world is at crossroads of likely restoring a multilateral order with economic and political tensions building further up.
Europe could benefit in coordination
The major challenge for EU is in closer policy coordination, increase of public investment in infrastructure and digitalization, transparent and equitable taxation policies. Domestic demand should be more in focus of some European countries like Germany and Italy keeping exports at sustainable levels. Infrastructure investments in energy efficiency, grids, efficiency of buildings and electric vehicles infrastructure should be more in focus. Simplification of fiscal policy rebalancing it towards expenditure growth with a limited debt burden would add further stimulus in economy.
Completing banking union, cleaning up banking sector, unifying capital markets across euro area, facilitating non-banking sector investments and mitigating segmentation in services and network industries could bolster capital flows and trade across Europe.
Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.
Indiscriminate reliance on illustrative or informational materials may lead to losses.
© 2000-2020. All rights reserved.
This site is managed by Teletrade D.J. Limited 20599 IBC 2012 (First Floor, First St. Vincent Bank Ltd Building, James Street, Kingstown, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at firstname.lastname@example.org.