Economic Forecasts from the World's Leading Economists

Global economic growth moderates in Q4 as uncertainty heightens

Global economic growth continued to cool in the fourth quarter of 2018, with aggregated growth hitting the lowest mark in two years. The global economy expanded 3.0% in the fourth quarter over the same period in the previous year according to an estimate produced by FocusEconomics. The print was a notch below the 3.1% expansion forecast in the previous month and Q3’s 3.1% increase.

Weak Q4 2018 caps sluggish year for Latin America

Latin America’s economic recovery appeared to veer off the rails somewhat through last year’s fourth quarter, ending a chaotic year for the regional economy. A preliminary estimate by FocusEconomics revealed that the regional economy grew 1.2% year-on-year in the fourth quarter; if confirmed, this would be down from the third quarter’s 1.5% outturn and would mark a full year of slowing economic activity. Deteriorating inter- and intraregional trade has been weighing on the regional economy, as has last year’s noisy political wrangling and, more broadly, emerging-market (EM) turmoil. One-off shocks to the region’s major-player economies also took their toll.

Regional growth likely perked up in Q4; early signs from 2019 are positive

FocusEconomics Consensus Forecast panelists expect the Central America and the Caribbean region to have expanded 4.1% in the fourth quarter of 2018, up from the third quarter’s 3.0% increase.

Looking ahead, ASEAN should grow strongly, supported by wage gains, infrastructure development and FDI inflows. However, more sluggish momentum in advanced economies and the lingering U.S.-China trade war will hurt exports. An escalation of the trade spat, potential financial market turbulence and a sharper-than-expected slowdown in China are the key downside risks.

All countries are expected to post weaker growth in 2019 compared to the previous year. The export-driven economies will feel the pinch from weaker global growth, rising trade protectionism and moderating growth in China. However, still accommodative monetary policies, coupled with ample financial and fiscal buffers, will keep growth robust overall.

Growth continues to sputter in Q4

Preliminary estimates revealed that the Eurozone continued to grow at a slower pace in the final quarter of 2018, rounding out a year that saw growth go from strong to moderate. According to Eurostat, GDP increased a seasonally-adjusted 0.2% quarter-on-quarter in the fourth quarter, matching the third quarter’s reading. While a detailed breakdown of national accounts is not yet available, a weak industrial sector and shaken confidence likely drove the lackluster result. The economy has slowed notably since 2017’s robust recovery, with growth falling to 1.8% in 2018 from 2.4% the year prior.   

Q4 2018 slowdown confirmed; external woes still largely offset by resilient internal demand

Economy slows to an over two-year low in Q4 2018

Economic dynamics in the South-Eastern Europe (SEE) region appear to have cooled in the fourth quarter of 2018 to levels not seen since Q3 2016, when regional economic growth was affected by a failed coup d’état in Turkey. Coupled with an expected economic downturn in Turkey, the region has been hit by softer economic activity in the Eurozone. According to a preliminary estimate by FocusEconomics, South-Eastern Europe’s (SEE) economy slowed to 0.6% in annual terms in Q4, well below both the 1.1% rise from last month’s forecast and the 2.4% increase in the third quarter.

Q4 2018 pick-up thanks to strong late-year Russian outturn

Last year’s uneven recovery of the Commonwealth of Independent States (CIS) economy picked up in the fourth quarter amid a seemingly broad-based expansion underpinned by improving extractives-sector activity and a construction boom in Russia, the region’s heavyweight. Fourth-quarter growth is likely to have jumped in Russia, which accounts for the lion’s share of the region’s nominal output, almost certainly fueling the broader acceleration given its strong economic ties to the remainder of the region. A preliminary estimate puts growth through last year-end at 2.6% year-on-year (Q3: +1.9% year-on-year). Available current-quarter data suggests, however, that the late-year bounce was short-lived on cooling manufacturing-sector activity, as well as deteriorating household-spending gains in Russia on the heels of last year’s value-added tax hike; FocusEconomics estimates first-quarter growth at 2.0% year-on-year.

OPEC oil production cuts begin to bite and political instability increases

Economic activity in the Middle East and North Africa remained subdued in the fourth quarter. According to an estimate by FocusEconomics, the MENA economy expanded an aggregate 1.9% annually in Q4, matching the result in Q3 and a notch above the 1.8% rise projected last month. Despite a fall in oil prices by the end of Q4, the oil sector benefited from increased oil supply. Economic dynamics among oil-importing countries were broadly stable due to a combination of solid domestic demand, healthy tourism inflows and policy reforms.

Regional growth is seen picking up for a third year in a row in 2019, as Nigeria’s recovery gathers pace and Angola exits from a three-year recession. In addition, modest growth in South Africa should also lend support to economic activity. Higher capital spending internally, coupled with a favorable price outlook for energy-exporters, are seen driving the overall expansion.