Global growth outlook for 2019 dims for first time - Reuters polls

[webfact]

Global growth outlook for 2019 dims for first time - Reuters polls

By Indradip Ghosh and Rahul Karunakar

 

Shipping containers are stacked for storage at Wando Welch Terminal operated by the South Carolina Ports Authority in Mount Pleasant, South Carolina, U.S. May 10, 2018. REUTERS/Randall Hill

 

BENGALURU (Reuters) - The outlook for global growth in 2019 has dimmed for the first time, according to Reuters polls of economists who said the U.S.-China trade war and tightening financial conditions would trigger the next downturn.

 

At the start of 2018, optimism about a robust global economic outlook was almost unanimous among respondents.

 

But Reuters polls of more than 500 economists taken this month showed a downgrade to the outlook for 18 of 44 economies polled, with 23 unchanged. Only three were marginally upgraded.

 

While risks from trade protectionism have been consistently highlighted by Reuters polls since January last year, the latest indicated that growth in about 70 percent of 44 economies surveyed has already peaked.

 

"A simple dynamic is playing out in the global economy right now: the U.S. is booming, while most of the rest of the world slows or even stagnates. The stresses caused by this divergence are playing out uncomfortably in many emerging markets," noted Janet Henry, global chief economist at HSBC.

 

"A U.S. Federal Reserve that is raising interest rates to prevent the U.S. economy from overheating is constraining the policy options of countries where financial conditions are tightening and trade tensions intensifying."

 

The latest shift in growth expectations comes on the heels of a deep sell-off in financial markets, especially emerging ones, largely driven by trade concerns.

 

A majority out of nearly 150 economists said the top two triggers for the next global downturn were a further escalation of U.S.-Sino trade tensions, and tightening in financial conditions driven by a deep sell-off in global equities or a rapid rise in government bond yields.

 

"First, there would be no winners from a global trade war. Even if the aggregate costs are modest and skewed towards more open economies, all countries would ultimately be worse off compared to the status quo," noted Neil Shearing, group chief economist at Capital Economics.

 

"(it)... would inflict lasting damage to growth and cause a permanent loss of output."

 

(Reuters Poll: Trigger for next global downturn,

 

U.S. President Donald Trump's administration threatened duties on $267 billion of Chinese goods on top of tariffs already levied on $250 billion previously - amounting to almost all imports. Beijing retaliated.

 

A majority of economists covering the U.S. economy who were asked an additional question said U.S. economic policy towards China over the next few years would become more confrontational.

 

Along with faster-than-expected increases in U.S. interest rates compared to the previous poll, that points to a substantial slowdown in the U.S. economy by late next year, even as it remains the current major driver of global growth. [ECILT/US]

 

But only a slim majority expect U.S. wage growth to pick up meaningfully before the next recession.

 

"The risk of a self-inflicted wound in the U.S. is rising. The dominant downside risk to the global outlook remains the Trump Administration's attempt to rebalance trade with China through tariff policy," noted Jean-François Perrault, chief economist at Scotiabank.

 

"The consequences of escalating trade actions are undeniable: higher prices in China and the U.S., less purchasing power for consumers in these countries, higher input costs, heightened financial market volatility, and possibly higher interest rates. These effects would likely spill over from these countries."

 

While global growth this year will hold strong, unchanged at July's 3.8 percent prediction, the consensus for 2019 was 3.6 percent, a cut for the first time since polling began for that period in July 2017. That was also lower than the International Monetary Fund's recent 2019 projection of 3.7 percent.

 

The European Central Bank was not expected to extend its bond-buying programme beyond this year, despite additional economic and political concerns from Italy and Brexit negotiations mounting. [ECILT/EU] [ECILT/GB]

 

But with no let-up in the U.S.-China trade war, growth forecasts point to more pain ahead - not just for developed but also emerging market economies.

 

From China to Turkey and Africa to Latin America, growth forecasts for the coming year were downgraded. [ECILT/CN] [ECILT/IN] [ECILT/TR] [ECILT/ZA] [ECILT/NG] [ECILT/LTAM]

 

"There has been an abrupt 'stop' of capital flows to EM (emerging markets) over recent months, which has created painful consequences for EM with large external deficits," said Adam Slater, a lead economist at Oxford Economics.

 

(Polling, analysis and reporting by the Reuters Polls team in Bengaluru and bureaus in Shanghai, Tokyo, Jakarta, Hanoi, London, Milan, Istanbul, Johannesburg, Toronto, Brasilia, Mexico City, Lima, Buenos Aires, Bogota, Caracas and Santiago; Editing by Ross Finley and John Stonestreet)

 

-- © Copyright Reuters 2018-10-22

[pegman]

Blame that idiot Trump.

[Becker]

13 minutes ago, pegman said:

Blame that idiot Trump.

Rest assured I am!

[Emdog]

Wife reported to me that her firm heard from government that growth was forecast to be 40% next year and management very enthused about that.

I wondered "Are they nuts? None of them have any critical thinking skills? Far as I know no economies grow at 40% unless per capita went from $10 a year to $14. Before they make big plans maybe they should check with reputable source rather than one that just tells them what they want to hear".

[GarryP]

5 minutes ago, Emdog said:

Wife reported to me that her firm heard from government that growth was forecast to be 40% next year and management very enthused about that.

I wondered "Are they nuts? None of them have any critical thinking skills? Far as I know no economies grow at 40% unless per capita went from $10 a year to $14. Before they make big plans maybe they should check with reputable source rather than one that just tells them what they want to hear".

Think your wife misheard. They are talking about 4% forecast growth for Thailand next year.

[marcusarelus]

8 minutes ago, Emdog said:

Wife reported to me that her firm heard from government that growth was forecast to be 40% next year and management very enthused about that.

I wondered "Are they nuts? None of them have any critical thinking skills? Far as I know no economies grow at 40% unless per capita went from $10 a year to $14. Before they make big plans maybe they should check with reputable source rather than one that just tells them what they want to hear".

Munchies in Canada looks like 40% next year can't think of anything else.

[Brunolem]

22 minutes ago, Emdog said:

Wife reported to me that her firm heard from government that growth was forecast to be 40% next year and management very enthused about that.

I wondered "Are they nuts? None of them have any critical thinking skills? Far as I know no economies grow at 40% unless per capita went from $10 a year to $14. Before they make big plans maybe they should check with reputable source rather than one that just tells them what they want to hear".

Heard from government...they're probably talking about debt growth...

 

Or they could be talking about interest rates growing 40%, from 0.1 to 0.14%...that would expain all the excitement...what are we going to do with all these extra satangs?

 

 

[guest879]

5 hours ago, pegman said:

Blame that idiot Trump.

Trump is not in control of the federal reserve. Any increases in interest rate moves the pin close to the asset and debt bubble that has been growing since interest rates were artificially lowered after 2008. Soon the world is going to feel the pain from this dangerous experiment. It is inevitable and will be a massive explosion or longer downward economic spiral.

[pegman]

6 hours ago, guest879 said:

Trump is not in control of the federal reserve. Any increases in interest rate moves the pin close to the asset and debt bubble that has been growing since interest rates were artificially lowered after 2008. Soon the world is going to feel the pain from this dangerous experiment. It is inevitable and will be a massive explosion or longer downward economic spiral.

The subject in the OP is the world economy not the USA Fed. It is Trump's trade war that is much more likely to affect that than US interest rates.

[candide]

10 hours ago, guest879 said:

Trump is not in control of the federal reserve. Any increases in interest rate moves the pin close to the asset and debt bubble that has been growing since interest rates were artificially lowered after 2008. Soon the world is going to feel the pain from this dangerous experiment. It is inevitable and will be a massive explosion or longer downward economic spiral.

The Fed reacts to conditions that are also influenced by Trump's policy. He has artificially increased the gdp growth rate by increasing the budget deficit and therefore public debt. It increases the demand for credit by the government. On top of it, the increase in GDP growth also triggers private demand for credit.

 

So the increase in both public and private demand for credit created by Trump's policy naturally induces the necessity to increase interest rates.

[Chomper Higgot]

The US economy (and by reliance much of the world economy) is driven by US consumer spending.

 

Trump has enacted tax cuts for the hyper wealthy that are paid for by stripping social and welfare programs.

 

Stripping these programs further impoverishes the already poor but also the middle class.

 

The wealth of America is being systematically removed from the middle class and handed to the hyper wealthy.

 

Who then will buy goods and services and what does that tell us about future business profits/stock prices?

[Credo]

And the global markets may just be looking a little shakier if this trend continues or spreads:

 

Market rout sends the Dow and S&P 500 into the red for the year

Stocks tumbled Wednesday, sending the Dow and S&P into the red for the year.

 

The S&P 500 (^GSPC) dropped 3.09%, or 84.59 points, to close at 2,656.10. The index started the year at 2,673.61. The Dow (^DJI) fell 2.41%, or 608.01 points, to close at 24,583.42. The 30-stock index started the year at 24,719.22

 

https://www.yahoo.com/finance/news/sp-trades-lower-boeing-lifts-dow-140722413.html

 

[Silurian]

14 hours ago, Credo said:

And the global markets may just be looking a little shakier if this trend continues or spreads:

 

Market rout sends the Dow and S&P 500 into the red for the year

Stocks tumbled Wednesday, sending the Dow and S&P into the red for the year.

 

The S&P 500 (^GSPC) dropped 3.09%, or 84.59 points, to close at 2,656.10. The index started the year at 2,673.61. The Dow (^DJI) fell 2.41%, or 608.01 points, to close at 24,583.42. The 30-stock index started the year at 24,719.22

 

https://www.yahoo.com/finance/news/sp-trades-lower-boeing-lifts-dow-140722413.html

 

 

Welcome to the Reality TV President and Republican economy. If you invested in a Dow Index fund at the beginning of 2018 you are now underwater. If Clueless Trump boasts about the Dow when it is up, he can certainly take the blame when it is negative.

 

Included in the wonderful news is that US wage growth is wiped out by inflation. Oh, that inflation is due to those brilliant tariffs that the idiot in chief thought were such amazing things. Clueless Trump and his Republican lackeys will drive the US economy into yet another recession.