Major Economies Consensus Forecast

Global growth is likely to dim this year, due largely to weaker momentum in developed economies and China. However, tight labor markets and more accommodative monetary policy should prop up activity. A further escalation of trade tensions, particularly between the U.S. and China, is the key downside risk

Canada
Economic growth will likely soften noticeably in 2019 compared to last year, amid weaker domestic demand growth and as a moderating global growth outlook hits exports. Volatile commodity prices, uncertain trade relations with the U.S. and elevated household debt pose downside risks.

Euro Area
Activity is seen slowing sharply this year amid a less favorable external environment, problems in the manufacturing sector and as uncertainty dent exports and investment growth. However, solid spending will curb the downturn. Risks stem from global protectionism, a sharp slowdown in China, resurging financial turbulence sparked by Italy and Brexit uncertainty.

Japan
Lower global demand should cause the economy to slow this year. Nevertheless, front-loading of consumer spending ahead of October’s sales tax hike should boost consumption somewhat. The trade outlook remains a key downside risk to growth, as a recent spat with South Korea adds to the U.S.-China dispute.

United Kingdom

The economy will perform poorly this year, held back by soft business investment and weaker growth in key trading partners. However, solid wage growth should underpin private consumption, while a more expansionary fiscal stance should also provide support. The highly uncertain outcome of Brexit remains the key risk to the outlook.

United States
The economy is expected to maintain its longest expansion in history this year, albeit at a slower pace as intensifying headwinds from weaker global growth and trade tensions weigh on momentum. Sustained consumer spending should taper the slowdown, however. The key risks to the outlook stem from a prolonged trade row and high corporate debt.

Switzerland
Inflation was stable at May’s 0.6% in June, and appears poised to remain feeble this year and next, owing to an overvalued franc and a slowing economy. Volatile oil prices and a potential rise in global economic uncertainty, which could boost safe-haven demand for the franc, could further dampen price pressures.

Focus Economics Major Economies Forecast, August 2019