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Analysts at NAB note that the global growth reached its highest rate since September 2011 in Q2 2018, but has likely peaked as NAB’s global leading indicator points to a slowing in the second half of 2018.

Key Quotes

“Moreover, underneath this solid headline reading, growth has become less synchronised across countries, and this will be exacerbated in the second half of the year due to a major deterioration in financial conditions in certain EM economies.”

“Contagion across the range of EM economies has so far been limited, but remains a concern against a backdrop of ongoing trade tensions. Reinforcing the expected slowing in growth is the gradual tightening in monetary policy underway across both advanced and EM economies, the fading over time of this year’s US fiscal stimulus and growing supply constraints.”

“Overall, we expect global growth to peak this year at 3.8%, before easing over 2019 (3.7%) and 2020 (3.5%). US/China trade tensions represent the major risk to the global outlook.”

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