The world economy

We assume that the moderate rate of growth of the global economy will continue in 2020 and that there will be no significant acceleration in the course of the year. The growth prospects for the industrialized countries are rather weaker than in the previous year, while the economies of the emerging markets should grow at a similar or slightly higher rate overall.

The persistent weakness of leading indicators points to continued weak growth for the economy of the European Monetary Union. In particular, we expect a perceptible slowdown of investment activity due to the significantly less favorable business climate and the weak development of incoming orders. However, as long as the recessionary trend in the industry sector does not have a significantly stronger impact on the labor market than it has done so far, private consumption should continue to be a solid driver of growth this year. In addition, although a further easing of monetary policy by the European Central Bank seems unlikely from today’s perspective, it cannot be ruled out in the event of a further economic slowdown. Overall, these developments should lead to a growth rate in the European Monetary Union of only about 1.0 %. The outlook for the German economy is also subdued. Here too, we expect the continuation of a weak growth rate of between 0.5 and 1.0 %. Because the concrete economic effects of the UK’s withdrawal from the EU, which has now taken place, cannot yet be foreseen in detail, the British economy must also be expected to develop rather moderately in 2020. Nonetheless, most analysts do not anticipate an economic slump.

Growth of the US economy is likely to fall below the 2 % mark for the first time since 2016. A combination of weaker global economic growth and continued uncertainty regarding the various trade disputes is adversely affecting companies and is likely to lead to a further slowdown in investment activity; growth in private consumption is also expected to slow down somewhat, but should remain solid thanks to moderate inflation and low unemployment. In view of these developments, the US Federal Reserve (Fed) is likely to adopt a wait-and-see approach for the time being, but will take appropriate countermeasures in the event of an economic slump or negative employment effects.

Growth of the Japanese economy is expected to slow down noticeably this year and to be only slightly above 0 % due to the effects of increased sales tax and the ongoing weakness of exports.

We expect economic growth in China to continue to slow down, as the effects of the trade conflict and the ongoing fight against structural problems such as industrial overcapacity and the very high levels of debt of state-owned enterprises will have a dampening effect. Since the government’s stimulus measures are likely to remain moderate in order to avoid excessive debt and bubble effects, Chinese growth will probably be below the 6 % mark this year.

While the development of the Central and Eastern European economies is expected to be similar to that of the previous year, slight acceleration of growth is anticipated for the South American economic area, mainly driven Brazil, the region’s largest market. However, with growth in gross domestic product expected to be lower than 2 %, South America still remains below its potential. Despite the still comparatively low level of commodity prices, especially of oil, the countries of the Middle East are expected to experience somewhat stronger growth of about 2 %, although with risks of a weaker development. Overall, the emerging markets should achieve economic growth in the magnitude of 4 % in 2020, thus developing along their long-term trend.

Overall, the world economy should grow in 2020 by approximately 2.5 %, similar to the moderate rate of expansion in the previous year.

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