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What is the situation in 2019 for the global economy?
According to all figures, global economic growth in 2018 is expected to close by about 3.7 percent, according to the International Monetary Fund.
The world's two largest economies – the United States and China – are expected to record reasonable growth rates in 2018.
The largest economy of all, the United States, experienced two quarters of strong expansion in the middle of last year. The data for the last three months of last year should be available by the end of January and, even if they show a slight slowdown, the whole year should experience strong growth (to the standards of this country) about 3%.
For China, the slowdown in growth is expected to continue in 2018 after three decades of staggering growth. Even in this case, the rate is expected to be around 6.6% by 2018, which is more than enough to significantly improve the standard of living of Chinese citizens.
Most conservative badyzes suggest that the recovery in global growth after the Great Recession of 2008-2009 should continue for at least a year or more.
So what are these black clouds?
Trump blamed the Fed when the US stock market collapsed at the end of 2018. – Photo: Leah Millis / Reuters [19659011] Growth is expected to be in the United States, the slowdown occurred in 2019. The acceleration of the Last year reflected President Donald Trump's tax cuts in 2017, which were in force in 2018.
Economists question the duration of this impact. Will the measure work as an "impetus", the effects of which will diminish over time, or will it have lasting results in terms of incentives for work and investment?
We must also take into account the impact of the US central bank, the Fed (Federal Reserve). Will the institution continue to raise interest rates to keep inflation close to the target of 2% a year, as it has done throughout 2018?
Trump believes that the action of the Fed poses a threat to the US economy. The Fed, he said, "is the only problem in our economy."
Indeed, Trump reinforces this idea so often that Treasury Secretary Steve Mnuchin felt the need to say publicly that the President had no intention of dismissing Fed chief Jerome Powell.
It is also unclear whether Trump really has the power to do so, but the Republican politician would certainly refuse to appoint Powell for another term before the Fed when the current period ends in 2022 (that is, if Trump is still in office). the president of the USA).
Whatever the case may be, the mere prospect of the US President exercising what many regard as undue influence on the Fed can potentially disrupt the financial market. The US Congress is responsible for the country's monetary policy, including the power to set interest rates.
The most widely held view among economists is that the best way to control inflation in the long term is to keep these decisions out of direct political control.
Trump's economic policy can also undermine economic growth: international trade.
Xi Jinping, President of China, Should Retaliate if US Imposed More Tariffs – Photo: Mark Schiefelbein / Pool [Xinhua / Xinhua / Xinhua / Xinhua] / AFP
US Open Conflict Since some time with China because of what Donald Trump calls the "technology theft" of US companies doing business in China.
In three months. , the tariffs imposed by the Trump government on a range of Chinese products will increase by 10% to 25% and China should retaliate as in the first round of tariff increases.
Trump and Chinese President Xi Jinping had recent conversations on the subject and it is possible that "escalation" of aggression be But there is nothing good.
In addition, there are US tariffs on steel and aluminum, created under the pretext of protecting the "national sovereignty" of the United States, and affecting a large number of trading partners the United States. Brazil and Argentina got rid of customs duties, which could have caused serious damage to the metallurgical industry of both countries.
Thus, the prospect of increased tensions in international trade is the first cloud loaded on the horizon.
Decrease in growth in Europe
Europe has to face its own problems. Economic data for the third quarter of last year already showed a sharp decline in growth in the euro area.
Some of these negative data may reflect a very short-term fall, caused by the EU's application of new rules for controlling pollutant emissions from vehicles – which paralyzed the industry for some time .
But bad data may also be the beginning of a more significant loss of speed of the economic recovery process – which has never been particularly strong in Europe.
A recent study of the industrial sector in the region showed that the slowdown continued in December – and that two of the largest economies in the bloc, Italy and France, have slowed down.
Europe must also be concerned about its own foreign trade problem: Brexit. The United Kingdom must leave the European Union on March 29th. How will this exit always be an open question? Several outcomes are possible, some of which are likely to shatter trade between the United Kingdom and the continent.
The stock markets experienced a period of turbulence at the end of 2018. Many stock exchanges around the world recorded significant gains early in the year, but subsequently reversed. Overall, this was the worst year for global markets since the 2008 financial crisis.
Weak stock prices may (on alert, may) be a harbinger of more widespread economic problems, or even worse. a new recession – but it is not liquid and certain that it will happen.
As ironically said economist Paul Samuelson, Nobel Prize winner, "Wall Street indicators have predicted nine of the last five recessions". Markets can give false alarms.
The debt market – which includes government bonds – is also on the verge of shedding light on the outlook for the US economy.
A phenomenon known as the "inverted yield curve" observed at the end of 2018 is a more reliable indicator of an economic downturn, although it does not specify when the recession will occur.
The phenomenon occurs when, at a given point in time, shorter-maturity bonds start paying more to investors than long-term bonds – the opposite of what usually happens.
That said, some serious economists believe that the United States is on the brink of a recession – not this year, but rather in 2020. Nouriel Roubini, who predicted the 2008 crisis, is one of them. He also warns that the next recession will be more difficult for the US government and the Fed than the previous one.
China also has something to worry about – there is growth in public debt and corporate debt, which can jeopardize the country's financial stability. Recent surveys conducted with national companies show that the number of new orders received by factories decreased in December 2018. This is the first time that this has happened for two years.
All in all, there are good reasons to see the outlook for 2019 as nebulous as it has been for years.
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