E World Economic Growth Is Expected To Remain Close To 4% In 2018 And 2019

The global economy is expected to advance by 3.9% in 2018 and 2019, though the global expansion is becoming more uneven and the risks to the outlook seem to increase with every new forecast.

While many of the advanced economies appear to be synchronized both in terms of economic growth and job creation, circumstances are more uneven among the emerging market economies. In general, the economies depending on oil exports are becoming stronger (with a few exceptions), while heavily indebted countries such as Argentina, Turkey, and Brazil present a new worry to the world economic outlook.

Assuming no major external shock, and because of widespread synchronization, global economic growth is expected to moderate gradually over the three years ending 2020. 

Of course, the simplicity of the” no shock” assumption may seem too problematic for some investors. One must concede that over the next several years the international economic and financial environment faces considerable uncertainty with the potential of mounting risks.

Alongside a visible slowing in world trade, global manufacturing also appears to be moderating, though activity is still reasonably strong.

While economic growth in the advanced economies is expected to gradually slow, nonetheless there is still significant growth momentum due too the benefits of accommodative monetary policies and the sizeable fiscal boost occurring in the U.S. economy.

This year’s October 29 deadline for the Brexit decision will clearly affect the UK and European economies. The impact in the short term cannot be positive.

Moreover, the uncertainty about future trading relations with the United States is expected to constrain confidence and investment in the near term. Meanwhile, markets remain on edge because of global trade tensions, with concerns that after China and Canada, Japan may be the next target for U.S. tariffs.

In addition, the gradual normalization of monetary policies in advanced economies together with some policy uncertainties has led to a tightening of financial conditions in recent months, particularly in some emerging market economies.