From Chief Economist Nariman Behravesh

The global economy started 2018 with strong, synchronized growth, but the momentum faded as the year progressed and growth trends diverged. Notably, the economies of the eurozone, the United Kingdom, Japan, and China began to weaken. In contrast, the US economy accelerated, thanks to fiscal stimulus. These divergent trends will persist in 2019. US economic growth will remain above trend, while other key economies will experience further deceleration. As a result, IHS Markit predicts that global growth will edge down from 3.2% in 2018 to 3.0% in 2019-and will keep decelerating over the next few years. One major risk in the coming year is the sharp drop-off in world trade growth, which fell from a pace of above 5% at the beginning of 2018 to nearly zero at the end. The risk of an escalation in trade conflicts remains elevated. If such an escalation were to occur, a contraction in world trade could slow the world economy even more. At the same time, the sell-off in equity and commodity markets, on top of the gradual removal of accommodation by some central banks, means that financial conditions worldwide are tightening. Combined with heightened political uncertainty in many parts of the world, these risks point to the increased vulnerability of the global economy to further shocks and the greater probability of a recession in the next few years-although still relatively low in 2019.

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