The world economy

At the beginning of 2019, the world economy is displaying rather weaker growth than in the previous year, but is generally continuing its solid development. We assume that this moderate slowdown will continue as the year progresses. Growth prospects for the industrialized countries in particular are rather less positive than in the previous year, while the economies of the emerging markets should develop at a similar rate overall.

Most economic indicators suggest that the economy of the European Monetary Union will experience a further slowdown in growth in the year 2019. If domestic demand remains robust, a lower contribution from foreign trade should lead to a growth rate of only about 1.5 %. Under these conditions, the European Central Bank will continue to follow its announced course and is unlikely to raise key interest rates; if it does, then probably not before the fall of 2019. The outlook for the German economy is also rather less positive and also here, we expect a further growth slowdown to less than 1.5 %. Because the exact procedure and economic effects of the United Kingdom’s imminent withdrawal from the European Union are still difficult to assess, the British economy must also be expected to develop rather moderately in 2019. But despite the high level of uncertainty, the majority of analysts do not expect an economic slump.

In the United States, the leading indicators suggest that the economy’s solid upswing should continue. However, growth is likely to be somewhat weaker than in the previous year, as the positive impetus from the tax cuts is coming to an end. Thanks to stable domestic demand, moderate inflation and low unemployment, the US Federal Reserve will probably be able to maintain its course of slightly restrictive monetary policy with further moderate interest-rate increases. All in all, total economic output should grow by between 2.0 % and 2.5 %.

The growth prospects of the Japanese economy also remain stable at a low level. A solid outlook for domestic demand should mitigate external risks, so that growth in gross domestic product (GDP) of just under 1 % can again be expected.

In China, the gradual slowdown in growth of recent years is set to continue this year. In particular, the uncertainties surrounding the trade conflict with the United States should continue to have a negative impact. On the other hand, the announced government stimuli should stabilize the economy. Overall, a still solid increase in gross domestic product of just over 6 % is to be expected. While the economies of Central and Eastern Europe are unlikely to match their robust growth of 2018, slight acceleration of growth is anticipated for the South American economic region. With GDP growth expected to be just below 2 %, however, South America remains below its potential. The ongoing comparatively low level of raw-material prices, especially of oil, is unlikely to deliver any support for the countries of the Middle East; their growth rates will probably remain significantly below average for this region at less than 2 %. Overall, the emerging markets should achieve economic growth in the magnitude of 4 to 4.5 % in 2019, as in the previous year, thus developing along their long-term trend.

Overall, the world economy should grow in 2019 by rather less than 3 %. Although this is an ongoing solid rate of expansion, it is significantly slower growth than in the previous year.

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