Major Economies Economic Forecast

Economic Snapshot for G7 Countries

October 23, 2019

Global economic growth is seen slowing marginally in 2020

Global economic growth is seen slowing marginally next year on weaker momentum in the G7 and China, which will only be partially offset by stronger growth in other emerging markets. Rising global trade protectionism is the key downside risk to the outlook, which primarily centers around the evolution of the U.S.-China trade dispute. 

Global Monetary & Financial Sector News

Global inflation remains largely subdued due to low oil prices and modest economic activity. Next year, inflation should remain broadly stable, with lower interest rates offsetting cheaper average oil prices. Major central banks have been quiet in recent weeks, following September’s round of monetary loosening which saw cuts by the Federal Reserve and ECB. Looking ahead, further easing is likely as central banks take advantage of generally mild price pressures to shore up growth prospects. 

The Fed eased its stance in October, but suggested it will now remain on hold for the near term, while China’s central bank cut rates in mid-November to support activity. Looking ahead, panelists see further monetary loosening in 2020, albeit to a more limited extent than in 2019, as central banks take advantage of generally mild inflation to boost growth. 

Over the last month, the Chinese yuan strengthened against the dollar on optimism over a partial trade deal with the U.S., while the pound also gained ground on a lower probability of a no-deal Brexit and the Swiss franc benefitted from still-solid safe-haven demand. The euro, Canadian dollar and Japanese yen were all fairly stable against the greenback.

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