As for much of 2019 so far, the global economy appears subdued. There are areas of strength, such as the U.S. but even there, manufacturing appears sluggish. In the U.K. the economy declined slightly in the April to June period of this year. However, the U.K. is not alone with growth appearing softer in other areas of Europe (notably Germany and Italy) as well as in Japan and Latin America according the International Monetary Fund’s most recent July estimates.
Furthermore, despite growing faster than many parts of the world China appears to be slowing too as weaker trade hits growth. Of course, as is typical, the global outlook is a mixed picture with the economies of the U.S. and India relatively strong at this point. Still, many expect global economic growth to be slower this year than it was in 2018.
The market’s reaction after a strong start to 2019, has been more negative in recent weeks. On the one hand there is concern that growth may decline, but on the other, some economic data is still inconclusive and pockets of strength remain in different countries and sectors of the global economy. Also potential policy reactions, such as the recent cutting of interest rates in the U.S. have offered some encouragement to markets and prompted some increase in bond prices, especially in the U.S.
As such, 2019’s final trajectory remains to be seen. Things are soft and could deteriorate from here as more data comes in. However, it’s also possible that reactions from policy-makers, improved trade discussions and other factors spur some improvement into the final stages of 2019.