Growth seen between the end of 2016 and the beginning of 2018 seems to be now over.
The global economy as a whole is expected to slow in 2019 as G7 countries return to long-run average growth rates, according to new projections from PwC in its latest Global Economy Watch.
PwC expects that the pick-up in growth of most major economies seen between the end of 2016 and the beginning of 2018 is now over. In the US, the boost from fiscal stimulus is expected to fade, higher interest rates are likely to dampen consumer spending and a strong dollar will continue to drag on net exports. PwC projects US growth will moderate from an estimated 2.8% in 2018 to around 2.3% in 2019.
Moreover in China, the impact of US tariffs and the need to control debt levels are likely to create a modest deceleration in growth in 2019.
At the same time, labour markets in advanced economies are expected to continue to tighten, with unemployment falling further even if job creation slows. This would push up wages, but cause problems for businesses looking to fill talent shortages. In 2019 PwC predicts unemployment will fall a little further in the US and Germany, where the rates of job creation have remained strong.
In the meantime, the UK is set to fall in the rankings of the world’s largest economies. Both India and France are likely to surpass the UK in 2019, knocking it from fifth to seventh place in the global table. PwC projects real GDP growth of 1.6% for the UK, 1.7% for France and 7.6% for India in 2019.