
Bloomberg
The European Central Bank expects the global economy to slow in 2019 as rising protectionism curbs trade growth.
While economic activity has remained resilient around the world, it has also become more uneven and signs of moderating momentum are increasingly evident, according to the ECB’s latest economic bulletin. Global trade growth has weakened and uncertainties about future trade relations have increased, the central bank added.
“Looking ahead, global economic activity is expected to decelerate in 2019 and remain steady thereafter. Global inflationary pressures are expected to rise slowly as spare capacity diminishes.†The cautious assessment comes amid volatility on global stock markets and as US-China trade concerns.
The ECB isn’t alone in expecting leaner days for the global economy. German companies have also grown more pessimistic about the outlook, an annual survey by the Cologne-based IW Institute showed.
Only seven of the 48 employers’ groups surveyed said Europe’s largest economy is in better shape than a year earlier and 21 said conditions are worse. A weaker pace of global expansion is hurting Germany’s export-oriented manufacturers, the survey suggested.
The ECB in December 2018 decided it will stop adding to its 2.6 trillion ($3 trillion) bond-buying program from 2019.
Policy makers will still keep a significant monetary stimulus in place to boost inflation and ward off “increased downside risk to expansion.â€
Slowing growth could create a quandary for euro-area member states with large debt loads, the ECB said.
“For high debt countries in particular, further consolidation efforts are essential to set the public debt ratio firmly on a downward path, as their high debt levels render them vulnerable to any future downturns or renewed financial market instability.â€