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IHS Markit predicts slowdown in global economy in 2019

25 Dec '18
3 min read

Global economic growth will fall to 3 per cent in 2019, from 3.2 per cent in 2018, says the annual Top 10 Economic Predictions by IHS Markit. While global growth will continue to decelerate, the economy will also become increasingly vulnerable to shocks. The probability of a single policy event seriously hurting global growth in 2019 is still relatively low.

“Policy mistakes remain the biggest threats to global growth in 2019 and beyond,” said IHS Markit chief economist Nariman Behravesh.

The US economy is expected to grow at a rate of at 2.6 per cent in 2019, less than the 2.9 per cent growth seen in 2018, but still indicative of solid economic fundamentals, according to a press release by business information provider IHS Markit.

The new year will see countervailing pressures on US growth: on the downside, the rising dollar, tightening credit conditions and higher tariffs could still hurt growth; on the upside, low interest rates, fiscal stimulus and constrained oil prices bode well for the US economy.

IHS Markit predicts Europe’s economic expansion will slow even further, declining to 1.5 per cent in 2019. Several adverse economic and political factors are behind the continued deceleration, including less accommodative credit conditions, the negative impact of trade tensions on the manufacturing sector and exports and the appreciation of the euro against most currencies except the US dollar.

Political risks have also increased significantly, contributing to the four year low in business sentiment and the continuing turmoil around Brexit will hurt UK growth, which will fall from 1.3 per cent in 2018 to 1.1 per cent in 2019.

Japan’s recovery will remain weak, expanding at a rate of 0.9 per cent in 2019 after growing 0.8 per cent in 2018, as the slowdown in China’s economy and the fallout from US-China trade war impact growth. The expected rise in construction spending ahead of the 2020 Olympics will sustain growth in 2019, but the boost will fade by the end of the year. China’s economy will keep decelerating, slowing to 6.3 per cent growth in 2019.

Growth in emerging markets has plateaued and will retreat in 2019 to 4.6 per cent, feeling the effects of slower growth in advanced economies and world trade, tightening global financial conditions, the strong US dollar and rising political uncertainty in countries like Brazil and Mexico, according to the prediction.

The U.S. dollar will maintain its strength against most currencies, with IHS Markit expecting the greenback to hold at the current elevated levels for much of 2019. (DS)

Fibre2Fashion News Desk – India

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