Quarterly Economic Outlook - Q3 2019
Thought Leadership
Quarterly Economic Outlook - Q3 2019
Weakening global growth amid geo-political tensions
- The global growth outlook has weakened slightly during the past quarter, led by a mid-cycle slowdown in manufacturing across the developed world, and exacerbated by the Trump administration’s enforcement of tariffs in pursuit of its trade policy.
- In response, central banks are likely either to reduce interest rates modestly where they have space to do so, e.g. the Federal Reserve (Fed), or by re-starting extraordinary measures such as asset purchases or new lending to banks, e.g. targeted longer-term refinancing operations (TLTROs) by the European Central Bank (ECB).
- At the same time consumer price inflation in many developed economies such as the US, the eurozone, and Japan remains well below the target of 2%.

United States
The US economy has been softening in a gradual way during the past few months. The weakness has been in investment (both business and housing), employment, manufacturing and trade, but it is by no means pervasive. Consumer spending has remained buoyant, and equities have held up... Read more
Eurozone
The Euro-area, especially Germany, has been hit by slowing exports, and by continued sluggishness in the domestic economy. Inflation, too, remains subdued.... Read more

China
With no trade deal at the G20 meeting in Japan, exports will continue to suffer. The authorities are likely to respond with further monetary and fiscal easing measures, but these are not likely to turn the economy around quickly (as in 2009-10).... Read more
United Kingdom
With the resignation of Prime Minister May, the focus has shifted to the contest for her replacement. Against a backdrop of uncertainty over the Brexit prospects and the Bank of England (BoE) allowing money supply growth of M4x to slow to 2%, it is no surprise that the economy remains in low growth mode, with inflation falling below 2%... Read more
Japan
Real GDP growth remains below potential and inflation should continue around 1%, well below the Bank of Japan’s (BoJ) target because monetary policy is not working.... Read more
Commodities
The expectation of lower interest rates in the US has driven up the gold price, and tensions in the Gulf have temporarily increased the oil price, but these upward moves are the exception in the commodity complex. With global inflation low and domestic demand moderate at best, broad indices of commodity prices are likely to remain subdued..... Read more