Economic Forecasts from the World's Leading Economists

Global economic outlook cut amid softer dynamics among developed economies

Global economic growth is expected to decelerate this year. This is mostly due to softer dynamics among developed economies, which are approaching the tail-end of their current economic cycles. Nevertheless, the global economy is seen benefiting from tight labor markets, still accommodative monetary and policy stimulus in some countries like China.

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.

Eurozone outlook cut for fifth consecutive month

Comprehensive data confirmed that the economy stuttered again in Q4 2018, with growth barely picking up after the Q3’s weak performance. Downbeat sentiment, troubles in the manufacturing sector and the unwinding of inventories weighed on the domestic economy. While the economic backdrop remains somber in 2019—with heightened uncertainty over Brexit and tariffs on the automobile industry—recent signs have emerged of a tentative stabilization. Retail sales jumped in January and the unemployment rate held at a multi-year low, boding well for household spending. Low oil prices, meanwhile, should keep inflation and the import bill in check. Furthermore, although economic sentiment continued to fall in February, the pace of decline moderated significantly. That said, the manufacturing PMI slumped in March, suggesting that the sector is still reeling from a slowing global economy and a bruised car sector.   

Central & Eastern Europe growth set to slow further in 2019

Regional growth is set to slow further in 2019, but it should remain healthy. Despite moderating, consumer spending will expand solidly, fueled by strong wage growth and tight labor markets. Similarly, growth in fixed investment will remain robust, yet it will decelerate due to slowing EU fund inflows. Pronounced economic weakness in the Eurozone cloud the outlook.

South-Eastern Europe regional growth seen moderating further in 2019

Despite still-robust domestic fundamentals, regional economic activity eased at the close of last year. Moderating growth in Romania and Greece, and a steep contraction in the region’s behemoth, which is suffering amid high inflation and unemployment, led the downturn. This year, regional growth is seen moderating further chiefly owing to a prolonged recession in Turkey.

CIS Countries regional growth set to slide this year

Regional growth is expected to slide this year, chiefly owing to the challenging economic situation in Russia due to the VAT hike and oil production cuts. Spillover effects from lower growth in the regional heavyweight will also hit other economies as remittances and export demand are squeezed. Overall, the bulk of CIS economies are seen losing steam this year.

Growth in the MENA region to gain steam in 2019

Economic growth in Middle East and North Africa will gain steam this year on the back of an expected increase in oil prices, bold fiscal support and still accommodative monetary conditions. That said, a reduction in oil output by key regional members in compliance with the OPEC+ deal and geopolitical risks darken the outlook.  

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.