Economic activity showed a marked slowing in growth in several countries during the second half of last year. The key issue for the forecast concerns to what extent this slowdown may presage a more widespread and deeper slowing in economic growth. Our central view continues to be that global economic growth will be weaker this year than last but that the pace of growth will moderate, not plunge. Three features support this view: part of the pick-up in growth in 2016–18 can be explained by expansionary policies, so that a slowing is a natural result of these policies maturing; monetary and fiscal policy in China have already been relaxed in response to the slowdown in demand, and more dovish sentiment around US and Euro Area monetary policy will support growth; and inflation, especially in the advanced economies, is expected to stay low at a time when growth has picked up, so that rising real incomes should contribute. Accordingly, we see 2019 and 2020 as years of slower output growth, not as years when a brake is applied to growth.
This open access is available as part of our ESRC IAA