Major Economies Economic Forecast

Economic Snapshot for G7 Countries

September 25, 2019

Global growth is set to ease this year

Global economic growth is expected to be subdued this year and next, mainly due to softer dynamics in developed economies. The global economy has been negatively affected by weak external demand, partly stifled by rising trade protectionism. Supportive fiscal and monetary policies, tight labor markets and low inflation, however, are expected to cushion the slowdown.

Global Monetary & Financial Sector News

Global inflation slowed from July’s 2.9% to 2.7% in August, according to a FocusEconomics estimate which excludes Venezuela. Subdued global economic growth and cheap oil prices are expected to exert downward pressure on inflation this year and next, especially among developed economies.

Low inflation is allowing central banks to ease their monetary policies in order to shore up faltering economic growth. The Fed and ECB both loosened the reins in recent weeks, while Japan could follow suit before year-end. Among developing economies, China cut the reserve requirement ratio in August, while Brazil, India and Russia all slashed interest rates.

Somber prospects for the global economy and an easing-or prospective easing-of monetary policy are prompting most currencies to depreciate against the U.S. dollar. That said, news that China and the United States resumed trade talks weakened the greenback to some extent.

 


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