During the year under review, the world economy achieved real growth of only slightly above 2.5 %. This was much weaker than in the previous year and was the first time since 2016 that it dropped below 3 %. (See graphic B.05) The slowdown affected almost all regions, but to different degrees. Growth in global trade also slowed down considerably, a development that noticeably impacted export-dependent economies in particular.
The industrialized countries were unable to maintain the dynamic economic growth that they had attained in the two previous years. This was also the case with the US economy. Following a robust first quarter, economic growth slowed considerably later in the year, but remained solid with approximately 2.3 % recorded for 2019 as a whole. While private consumption continued to be robust, business investment weakened substantially as the year progressed. This was due, in part, to the fading boost from tax cuts as well as ongoing insecurity regarding further escalation of the trade conflict with China. Economic development slackened even more in the euro zone. The weak global demand, especially in China, as well as the trade dispute between the United States and China and the risk of a no-deal withdrawal of the UK from the European Union, had an especially negative impact on the manufacturing sector. As a result, economic growth in the euro zone dropped to just over 1 %, even though the services sector and private consumption remained resilient. Because of its pronounced dependence on industrial production and foreign trade, the German economy only grew by about 0.6 %. The ongoing Brexit uncertainty and its dampening effect on investments caused the economy of the United Kingdom to slow down to a moderate pace of 1.3 %. Slower export growth and continued low investments are also impacting the Japanese economy, which grew at approximately 1 % or about the same as in the previous year.
China’s economic growth continued to lose momentum last year as a result of a weakening of both domestic and export demand. At just 6.1 %, growth for the year as a whole was noticeably lower than in 2018. As expected, the other economies in Asia were unable to disconnect themselves from the slowdown in world trade and the weakening of China’s economic growth. As a result, these economies grew much more slowly than in the previous year. The slowdown was especially pronounced in India, where economic growth dropped to around 5 % and thus to the lowest level in ten years. South America’s hopes for a noticeable economic rebound were not fulfilled. The ongoing and deep-seated crisis in Argentina and the continued rather disappointing development in Brazil have slowed down economic growth in the entire region. Growth was also lower than in the prior year in Central and Eastern Europe. This was mainly due to the severe economic crisis in Turkey as well as the substantial decline in the growth of the Russian economy. The much lower average price of oil over the year compared to the prior year ensured that economic growth continued to be rather weak in the Middle East as well. All in all, the growth of about 4 % that was recorded in the emerging markets was significantly below the prior-year rate.
Currency exchange rates remained volatile in this heterogeneous growth environment. Against the US dollar, the euro moved between $1.08 and $1.16 during the year. At the end of 2019, the euro was around 2 % weaker than at the end of 2018. The range of fluctuation of the Japanese yen against the euro was 116 to 128. Year-on-year, at the end of 2019, the euro had depreciated by about 3 % against the yen. At the end of 2019, the value of the British pound was about 5 % higher than at the end of the previous year. The euro rose by almost 2 % against the Brazilian real and by about 10 % against the Turkish lira. However, it depreciated considerably against the ruble, losing about 12 % of its relative value.