Developed markets, threatened: advanced economies to slowdown in 2019

The global economy slows down. The economy of advanced countries is predicted to grow by 1.6% in 2019, compared to the 2.3% increase in the previous year. Over the next year, the decline will continue to be the standard, with growth forecasts of only 1.4% by 2020.

The risk of a trade war, political uncertainty in the Middle East, the drop in consumer confidence, the high level of debt, monetary policy or the slow progress of productivity, which limits the growth of family income, are some of the factors that undermine global growth, according to the Global Economy in 2020 report, produced by Euromonitor.

The United States will be one of the most penalized countries in this area. The first world power will register an advance of 2.2% in 2019, compared to the growth of 2.9% in 2018. By 2020, consultants expect the US economy to slow down, until registering an advance of only 1.5%. However, Euromonitor expects consumption to continue advancing in the upcoming years.

The risk trade war, political uncertainty in the Middle East or the drop in consumer confidence are some of the key factors that are weighing down global growth

On the other hand, Japan will record and advance of 1% in its economy, compared to the 0.8% increase from the previous year. However, by 2020, the Japanese market will equally slow down, recording a growth of only 0.3%. The Bank of Japan adjusted the country’s growth prospects for a reasonable forecast.

One of the factors undermining the growth of the Japanese economy is consumer confidence, which remains at low levels after the country announced an unexpected tax increase. This element, together with the fall in exports and the consequences of Typhoon Hagibis that devastated the country last October, will similarly hinder Japan’s GDP growth.

As for the Eurozone, it’ll moderate progress in 2019, with a 1.1% increase in GDP, compared to the 1.9% increase in 2018. However, by 2020, Euromonitor predicts a eurozone recovery, with an increase of 1.2%. 

Emerging markets will slow down in 2019, recording an advance of 3.99% 

The Brexit uncertainty, Germany‘s technical recession, the decline in exports and private investment, as well as the low production yield of the region, are some of the factors that have hampered the euro zone’s economy.

Emerging markets also on alert

Emerging markets are not spared from the economic slowdown, according to Euromonitor. According to the consultancy, developing economies will only advance by 3.9% in 2019, compared to a 4.5% growth in 2018.

China’s GDP will slow its growth rate from 6.6% in 2018 to 6% in 2019. By 2020, the country's economy is expected to advance only by.7% due to a decline in consumption, the trade war with the United States and the decrease in investment.

The policies of the Navendra Modi government along with the drop in consumption will also impact India’s economic development this year. Euromonitor predicts the Asian country to record an increase in its GDP of 5.5% compared to the 7.3% increase in 2018. However, the consultancy expects India to recover in 2020, recording a growth of 6.5%.

Meanwhile, the Brazilian economy will only see an increase of 0.7% in 2019. Inflation combined with the high level of unemployment and low industrial capacity in the country are some of the factors that Euromonitor points out that will weigh down Brazil’s GDP.