According to analysts at Wells Fargo, the next few months will be key to the global growth outlook, with the 31 Brexit deadline and multiple possible US tariff increases to Chinese goods.
“The global economy remains under pressure, with 2019 real GDP growth looking increasingly like it will be the slowest since 2009. The weakness continues to be concentrated in the manufacturing sector as the escalation in the trade dispute between the United States and China works its way through global supply chains. The Eurozone manufacturing PMI is near lows not seen since the depths of the 2011-2012 European sovereign debt crisis, while industrial production growth in China is at its lowest point in nearly 20 years. While the service sector in most large economies continues to expand, it too has begun to feel the pain recently.”
“The fiscal policy response in developed economies has been minimal, leaving central banks to do the heavy lifting. The European Central Bank (ECB) cut rates in September and restarted its quantitative easing program, while several emerging market central banks like the Bank of Mexico and the Reserve Bank of India continued to cut rates in an effort to spur faster economic growth.”
“The next few months will be key to the outlook, with an October 31 Brexit deadline and multiple possible U.S. tariff increases looming between now and the end of the year. Against that backdrop, we expect most central banks to remain in easing mode to support their economies. Brexit and trade uncertainty appear likely to remain major issues in 2020, however, and as a result we think global economic growth will likely remain relatively slow through at least the first half of next year.”