August 17, 2018

The Forward View – Global: August 2018

Growth remains above trend, but risks a concern.


  • As expected, after hitting a soft patch in Q1, major advanced economy growth rebounded in Q2, with the exception of the Euro-zone. Business survey readings have also come off recent peaks but are still at solid levels. Fiscal policy (mainly in the US) as well as still stimulative monetary policy continues to underpin growth.
  • A tightening in advanced economy monetary policy settings is underway. However, it is only gradual, particularly given the advanced stage of the economic cycle, highlighted by low (and falling) unemployment rates.
  • Industrial indicators in emerging market (EM) economies are mixed and risk concerns are elevated as some EM financial markets have come under strong pressure, most notably Turkey recently, with some contagion to other EMs.
  • Trade policy continues to be a major risk facing the global economy. Threatened US/China trade measures would represent a notable headwind to growth if put in place. Our forecasts assume that this does not occur, although without a high degree of confidence.
  • Global growth appears to have remained above average through the first half of 2018, but with our leading pointing to a moderation in coming quarters, we think that this will represent the peak for this cycle. As a result we expect global growth to reach 3.8% in 2018 and then to ease over 2019 (3.7%) and 2020 (3.5%).

For further details, please see the attached document: