Outlook 2019: 60 seconds on the global economy

We expect global growth to slow down in 2019. We think there will be more impact from the trade wars, so the external environment will get more difficult for the main economies. The US and China, in particular, will continue their trade wars and continue to slow down. That will have an impact on growth elsewhere, so Europe and Japan will also be affected by the slowdown.

We do think though that the US interest rate profile is going to show a peak next year. So, the Federal Reserve will continues raising rates, but we think they will stop when they get to 3%.

One of the other factors that will slow down the US economy is that fiscal policy, which has been so important in 2018, is going to become less of a factor. So, the US economy from the fiscal side is going to get less of a boost. As we head into 2020 though, we think that growth could slow quite materially.

The upside of this for global markets is that we could see a turn in the US dollar. As it becomes apparent that interest rates could peak, then we would expect the dollar to weaken again, and that could be very important for global liquidity and important for global emerging markets.