The month of May saw broadly negative news for the markets. Trade talks between the U.S. and China broke down leading to further barriers to trade between the two countries and Prime Minister Theresa May’s resignation created further uncertainty for the direction of the drawn-out Brexit process. Also, The International Monetary Fund (IMF) in its recent assessment of the global economy described the overall situation as “precarious”.
However, despite the uncertainty, there are bright spots too. Most major countries, with the exception of Turkey, are expected to see growth in 2019, on the IMF’s most recent projections, even if this growth is at generally slower rates than last year. Also, data on the global economy, though mixed, does not appear to be weakening to the extent that some fear. There is slowing, but few signs, so far, of a more abrupt halt.
The British economy remains relatively weak by international standards, in a similar position to Japan and most Eurozone countries. Growth for the U.K. is expected to be closer to 1% for 2019, compared to a level of closer to 2% for the U.S. and higher rates exceeding 6% and 7% respectively for the emerging market economies of China and India. However, we should not forget that growth appears to be generally positive globally, even if we are seeing a clear slowing from the levels of 2018.