TORONTO, April 12, 2019 /CNW/ - Global growth is slowing as the economy works through a soft patch. Early signs suggest the worst of the slowdown might be behind us. The expansion is in a delicate situation. Investors are nervous and maintaining confidence is key to a continued expansion. The global economy is particularly vulnerable to policy missteps, notably President Trump's continued threats to disrupt US trade flows.
"While we continue to think the soft patch we are going through will be temporary, the global economy remains in a delicate position," said Jean-François Perrault, Senior Vice President and Chief Economist at Scotiabank. "At this point in the cycle, confidence is key to sustaining the expansion, and Trump's misguided efforts to make America great risk achieving the opposite."
Highlights of Scotiabank's Global Outlook include:
- Canada: Above-potential growth to resume in Q2 as the factors contributing to the soft patch in Q4 2018 and Q1 2019 are reversing. Growth is expected to slow modestly to 1.6% during 2019 before rising to 2.1% in 2020.
- United States: A gradual US GDP growth slowdown (2.9%/2.4%/1.9% in 2018/19/20) is expected on the back of the waning boost from fiscal stimulus.
- United Kingdom: While we expect that the UK and the EU will avoid a hard Brexit, we forecast that economic growth in Britain will remain sluggish in the near-term amid lingering geopolitical uncertainty and as the economy adjusts to a post-Brexit world.
- Eurozone: Real GDP growth will slow in 2019 owing to global trade and geopolitical uncertainty as well as certain transitory factors impacting the European industrial sector. Domestic demand in the euro bloc should, however, remain resilient despite external headwinds.
- Mexico: heightened uncertainty is leading to slower growth, with GDP expected to rise by 1.4% in 2019.
- China: A gradual deceleration is underway, but recent policy measures to raise demand are starting to bear fruit.
- Commodities: Healthy global economic growth provides a solid demand backdrop for commodities through 2020, allowing fundamentals to reassert commodity-specific price paths over the coming years
Read Scotiabank's Global Outlook online here.
Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues. Follow this research on Twitter at @ScotiaEconomics.
Scotiabank is Canada's international bank and a leading financial services provider in the Americas. We are dedicated to helping our more than 25 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of more than 98,000 employees1 and assets of over $1 trillion (as at January 31, 2019), Scotiabank trades on the Toronto Stock Exchange (TSX: BNS) and New York Stock Exchange (NYSE: BNS). For more information, please visit www.scotiabank.com and follow us on Twitter @ScotiabankViews.
1Employees are reported on a full-time equivalent basis.