Business and consumer confidence indicators have weakened since the start of the year but continue to show high levels of optimism. Unemployment is low in many countries and is expected to fall further. The normalisation of monetary policy by central banks is reducing the pace of the global economic boom. Global GDP growth is expected to end this year unchanged at 3.7 percent before falling to 3.5 percent in 2019.
The European economy peaked last year and major countries like Germany, France, Italy, Spain and the UK will all see slower growth in 2018. In the eurozone, domestic demand – especially private consumption but also investment – is the prime economic engine. Export growth has slipped from its lofty levels of last year amid rising concern over a global trade war and weaker international demand.
Lower growth in China and Japan has slowed the pace of expansion in Asia. The Chinese government has imposed a credit squeeze to protect financial stability and is also focusing increasingly on long-term sustainable growth that is more closely rooted in domestic consumption.
In the US, an expansionary fiscal policy and strong labour market will combine to deliver strong growth this year and next. This is good for the entire region because the US is by far the largest economy in North America.