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According to the Research Department at BBVA, economic growth gained momentum in early 2019 across the world, but they point out that protectionism is a threat and also signal some worries about the factors behind Q1 growth.  

Key Quotes:  

“Growth in the Eurozone, China and US surprised on the upside in 1Q19, but with some worrying signs stemming from its composition as it was supported by building inventories and declining imports, likely related with trade concerns and slowing domestic demand. In Europe, the positive surprise could also be linked to fading negative one-off effects in previous quarters and the positive effect of mild winter.”

“Up to March hard data was mixed: retail sales are still strong across the board, suggesting that domestic demand remains as the main driver of growth across regions, but contrast with the weakness of industrial sector and global trade.”

“But soft indicators slid again in April: Global manufacturing confidence remains gloomy, while services PMIs fell in developed and emerging economics and increased concerns about contagion effect from trade and manufacturing to services.”

“The escalation of US-China trade war (tariff increases and technological disputes) could weigh markedly on China’s GDP growth if they are not reversed, and would also the US and the EZ, eventually could negatively affect the good growth performance so far this year. However, this negative impact could be offset in the short-term by further expansionary fiscal and monetary policies (mostly in China).”