Global | Downward revision of world growth forecasts amidst increasing uncertainty

Summary

Global growth will continue to decelerate in 3Q19, as higher trade protectionism and uncertainty keep having a negative impact on global activity. Countercyclical policies, led by central banks, help to mitigate negative effects, but they will not prevent the global economy from slowing more than expected three months ago.

Key points

• Key points:
• BBVA-GAIN model suggests that weaker global momentum extends into 3Q19 (2.8% annualized).
• The US forecasts were revised down to 2.3% in 2019 and 1.8% in 2020, converging to potential growth faster than expected.
• China projections are now at 6% in 2019 and 5.6% in 2020 due to increasing signs of widespread moderation of the economy, but fiscal and monetary measures should prevent a sharper slowdown.
• In the Eurozone, Brexit and some structural factors in the auto sector add to global headwinds, and we now expect a further growth slowdown in 2020 to 0.8% from 1.1% in 2019.

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