The Global Economy is Slowing
After hitting its stride earlier this year, the global economy is about to lose a step. Not long ago, most of the world’s largest economies were expanding briskly in unison. But, the good times are giving way to heightened risks and slower growth.
It won’t be a major downturn, though, as it’s not anticipated to be a recession or anything dire. In fact, total global GDP will still expand by a healthy 3.6% in 2019 which is off a bit from 3.7% this year, but a solid overall performance.
Though economies globally will still grow, the peak of the global boom has passed. Future expansion will be more measured. Trade levels will rise, but not as swiftly. Exports of U.S. products won’t grow quite as fast. In other words, there will be less oomph for firms with International sales and supply chains.
Why the less rosy outlook?
Many reasons define the decline in growth. Trade disputes, especially between the U. S. and China, the world’s top two economies, are the major influencers for this. An end to the cycle of tariffs and countertariffs being levied by Washington and Beijing is still a distant prospect, but the effects of them are just beginning to take on the characteristics of reducing the economic progress globally. China’s economy is in for tough sledding as American duties on many, and perhaps all, of the goods it sells to the U.S. start to take a toll. Look for China’s GDP to expand by 6.3% next year, after 6.6% in 2018 and double digits not too many years ago.
Emerging markets are in the doldrums as rising interest rates in the U.S. put pressure on their currencies and make their debts harder to service. Argentina, Turkey and India are among the countries in for an especially bumpy financial ride. The same goes for Brazil, more so in light of questions of how a new president will govern Latin America’s top economy. Even India, while still set to grow at a torrid 7.5% next year, is starting to cool off.
Europe has the most worries heading into 2019: The Brexit negotiations still haven’t yielded any agreement that would preserve trade links between the U.K. and the European Union (EU). A last-minute, temporary deal avoiding an abrupt break is still the most likely outcome before the March 2019 exit. But, it’s far from certain. Italy’s fiscal standoff with the EU shows no sign of easing. The coalition that governs Italy wants to run a bigger budget deficit in order to invigorate the economy, which has been flagging. EU leaders in Brussels, however, say that it violates EU budget rules.
On the plus side, Japan seems to be perking up after a period of stagnation. While still sluggish, its GDP should actually grow a bit faster next year than in 2018. A few Asian countries may gain at China’s expense. Vietnam, the Philippines and other figure to export more to America as U.S. sanctions hit Chinese production. But overall, the picture has darkened as new risks dim previous optimism.
Parker Associates and PTC Computer Solutions have worked on a plentitude of projects through the years where many benefited from our experience gained while working in 17 foreign countries and for more than 500 developers and builders since 1982. Want to learn how we can assist your next development? Visit our website at http://www.parkerassociates.comand/or call David WB Parker at 904-607-8763.
David WB Parker is a principal of Parker Associates of Jacksonville, Florida, marketing consultants to the real estate industry; President of PTC Computer Solutions, IT Specialist, and an active real estate sales professional with PARFAM REALTY based in Jacksonville, FL. He can be reached at 904-607-8763 or via email firstname.lastname@example.org.