Global GDP Update
Recent IMF updates for projected Global GDP have added to a number of factors spooking world equity markets that have already retreated by almost 10% across most developed markets, since the beginning of October.
The IMF report shows that whilst the “steady expansion” that we have seen since 2016 continues and is projecting similar levels of growth in both 2018 and 2019, the overall level of expansion has become less stable and has probably peaked across some major economies.
The report also highlights that the number of potential downsides has increased compared to any likelihood of any “upside surprises”.
That said, global growth for both 2018 and 2019 should remain at the levels seen in 2017. This is a slight decrease compared to projections from April 2018 and the overall picture has become less balanced. Global growth is now projected at 3.7% for both 2018 and 2019, 0.2% lower than the predictions in April.
The primary reasons cited by the IMF for this reduction relate to Trump’s trade wars with China. In addition, there is a weaker outlook for some key emerging markets for country specific factors, such as a tightening of financial conditions and higher oil costs.
The chart below shows the latest near-term predictions split between developed and emerging markets.