The global economy started 2018 on a positive note however the momentum lost steam. In this article, Oya Celasun, Gian Maria Milesi-Ferretti, and Maurice Obstfeld explain the entire year in five charts.
First posted on:
IMF blog, 20 December 2018
1 The global economy started 2018 on an upbeat note, buoyed by a pickup in global manufacturing and trade through 2017. As investors’ confidence in the global economic outlook lost steam, so did the upswing.
2 One cause of this loss in momentum may be the implementation of tariffs by major economies-especially the United States-and retaliatory measures taken by others, including China. The increasingly protectionist rhetoric on trade has meant higher uncertainty about trade policy, which weighs on future investment decisions.
3 Despite these actions, the united states economy expanded at an easy pace in 2018, as tax cuts and spending increases stimulated demand. THE UNITED STATES Federal Reserve has continued to improve the policy interest as a result. Interest levels on US long-term bonds have increased less, as investors see risks to future growth and value the safety folks Treasury securities.
4 As growth and interest levels in the usa have outpaced those in other major economies, the united states dollar has appreciated against almost every other currencies in 2018.
5 Some vulnerable emerging market economies attended under strain as the united states dollar gained value and the amount of risk that global financial investors were ready to accept dropped. Many of these countries have observed increases within their external borrowing costs, however the extent of the increases varied widely.
How will the global economy fare in 2019? Keep tuned in until January 21, when the World Economic Outlook Update will show the IMF’s take on where in fact the global economy is headed.