The Global Economy Is Slowing, However A Global Recession Is Not Inevitable

“The global economy is now in a synchronized slowdown…In 2019, we expect slower growth in nearly 90 percent of the world….This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade…. Research shows the impact of the trade conflict is widespread and countries must be ready to respond in unison with cash infusions.” (Kristalina Georgieva, The IMF, October 10, 2019)

The global economy’s synchronized slowdown is worsening, and this year global growth will fall to 3%, its lowest rate since the beginning of the decade. Virtually all forecasting groups accept that the global outlook continues to worsen. My take on this is presented in the following table. The IMF’s latest projections are also presented here. 

As the following brief projections indicate, the global economy will this year decelerate to about 3% real GDP growth, and then improve a bit to 3.4% in 2020. This global projection does not incorporate an obvious recession scenario for 2020.

The large US economy, which is also decelerating, outperforms most of the advanced economies, even into 2020.

 Germany’s economy could well fall into a technical recession this year, since it has already contracted in the second quarter of 2019.

The Euro Area economy which expanded 1.9% in 2018, is projected to slow sharply in 2019 and 2020. However, the 19 countries in the Euro Area taken together should be able to avoid falling into a recession in 2020.

The UK economy, which is saddled with much uncertainty due to Brexit, should continue to grow in 2019 and 2020, but at very slow growth rates in each year.

Major World Economies at a Glance: 2018-2020

​The IMF World Economic Outlook, October 2019