The world economy was in its full potential at the beginning of the year 2018, but as the year progressed, by the end of the year the momentum faded and the growth tends to cease.
The weaker growth of the world economy in the current year and in the next few years is due to less accommodative financial conditions at the global level and the end of the current economic cycles of some of the world's largest economies. Also, the major reason that risk the economic development of the world is the prevailing political and trade tension between China and the United States.
The above reasons and other minor reasons at the global level have suggested some major conclusions that define the world economic condition for the year 2019.
What comes in 2019?
- 1. US economy will remain solid: According to the current status of sustainable growth in the labor force and productivity, the US economy tends to grow by 2.0%. This accelerated growth is due to a large dose of fiscal stimulus in the form of tax cuts and spending increases in the year 2018. The impact of this will remain in 2019 but will slowly start diminishing. Thus the overall expected economic growth in the year 2019 will be less than 2018 but still, remain above the trends.
- 2. Europe expansion will slow down: The European nation was in the peak growth phase in the second half of 2017 but steadily declines since then. This declining will continue in the year 2019 due to political uncertainty, including Brexit, challenges to Emmanuel Macron’s government, and the winding down of Angela Merkel’s chancellorship. Also, other reasons, like the tightening of credit conditions and increasing trade tensions are contributing to the decelerating growth of the nation.
- 3. Weaker economic growth of Japan: Although the Japan economy showed tremendous growth in the year 2018 the year 2019 will increase its growth slightly. This is because of the existing trade tensions between the US and China, a continuation of monetary policies, declining labor force, and the slowing down of the “third arrow” of Abenomics are major responsible factors that contribute to weaker economic growth of Japan in 2019.
- 4. Deaccelerated Growth of Chinese economy: Since 2017, the Chinese economic growth is slowing down and will remain in decelerated growth in 2019. The high instability in the financial market, high debt affecting the credit growth, and the tensed trade issues with the US are affecting the growth of the nation.
- 5. Trade conflict will deepen: The trade war between the US and China will continue in the year 2019. This will more likely to generate uncertainty for policymakers and businesses. The existing trade issues are likely to expand and will grow deeper according to different scenarios
- 6. The UK will grow as the world's largest economies: The UK economy was considered as the fifth largest economy in the year 2018 by the IMF. On analyzing the current scenario, the economic condition will surpass by two others; India and France in 2019.
- 7. US dollar will remain powerful: The growing trend of the US and the rate hikes by the Fed are more likely to offer better strength to the nation. According to the latest data in the Forex market and the emergence of a market, currencies tend to make the US dollar the most powerful currency.
The above predictions are made according to the currently available data. Analyzing and planning the global growth by analyzing the above data will help the nations to plan their economy and to move ahead in a smart way. This was our view about the world economic condition in 2019, you can add your own views and top economic prediction. We would love to know your thoughts.