• The global growth outlook has weakened further during the past quarter, with the contrast between manufacturing and service activity becoming more pronounced. President Donald Trump’s tariff measures, though modified to a degree, continue to affect global trade volumes and business expectations adversely.
• In response to the widespread softening of manufacturing, central banks have reduced interest rates modestly where they have space to do so, for example the US Federal Reserve (Fed), or as in the case of the European Central Bank (ECB) there has been a re-start of asset purchases (quantitative easing) and new lending to banks, for example, targeted longer-term refinancing operations (TLTROs).
• At the same time the targeted consumer price inflation in many developed economies such as the US, the eurozone, and Japan remains well below the intended rate of 2%.

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During the first half of the year US real GDP has grown at a moderate rate of 3.1% in Q1 2019 and 2.0% in Q2 2019, giving an average of just over 2.5%. This is slightly ahead of typical estimates for the economy’s potential growth rate of 1.9%. Read more

Over the past decade China’s economy has gone through a rollercoaster. Initially between 2009 and 2016 there was a series of monetary and debt expansion episodes which have been followed in the past three years by the opposite – persistently slowing money and debt growth. Not surprisingly, the effects are now starting to show up in the economy. Read more

Revised real GDP data for the Japanese economy showed that it slowed from 2.2% at an annualised rate in Q1 2019 to 1.3% in Q2 (0.3% qoq). The private and public sectors each contributed 0.3% but there was negligible contribution from residential or nonresidential investment. The slowdown in real GDP growth did not prevent Prime Minister Abe from finally implementing the twice delayed increase of the consumption tax on 1 October, raising it from 8% to 10% – still a low figure compared with an OECD average of 19.2%. Read more