Global Economy Continues to Suffer Weak Growth Momentum

Michelsen, Claus; Baldi, Guido; Dany-Knedlik, Geraldine; Engerer, Hella; Gebauer, Stefan; Rieth, Malte (2019). Global Economy Continues to Suffer Weak Growth Momentum. DIW Weekly Report, 9(49+50), pp. 420-422. DIW Berlin Deutsches Institut für Wirtschaftsforschung e.V. 10.18723/diw_dwr:2019-49-2

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Favorable labor market conditions and the resulting increase in private consumption are still sustaining the global economy. Trade disputes and political uncertainties, however, continue to slow investment activity, with the result that economic growth will only be moderate particularly in advanced economies. By contrast, growth is accelerating in emerging markets, especially in India. Global economic growth is likely to remain moderate over the next two years. Consumption, in particular, will continue to prop up the economy, with investment activity expected to remain sluggish in the near term, despite favorable financing conditions. Towards the end of the forecast period, investment is expected to pick up again and trade to recover, replacing private consumption as the main drivers of growth. Worldwide, the economy is expected to grow by 3.6 percent this year and by 3.7 percent in each of the two subsequent years. Even though tariff disputes between the US and China have eased somewhat, downward risks remain high. Additional US tariffs and Brexit uncertainties threaten to weaken the economy.

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