2019 In Review: The Global Economy Explained In 5 Charts

from the International Monetary Fund

-- this post authored by Gita GopinathGian Maria Milesi-Ferretti, and Malhar Nabar

Global growth this year recorded its weakest pace since the global financial crisis a decade ago, reflecting common influences across countries and country-specific factors.

Rising trade barriers and associated uncertainty weighed on business sentiment and activity globally. In some cases (advanced economies and China), these developments magnified cyclical and structural slowdowns already underway.

Further pressures came from country-specific weakness in large emerging market economies such as Brazil, India, Mexico, and Russia. Worsening macroeconomic stress related to tighter financial conditions (Argentina), geopolitical tensions (Iran), and social unrest (Venezuela, Libya, Yemen) rounded out the difficult picture.


With the economic environment becoming more uncertain, firms turned cautious on long-range spending and global purchases of machinery and equipment decelerated. Household demand for durable goods also weakened, although there was a pick up in the second quarter of 2019. This was particularly evident with automobiles, where regulatory changes, new emission standards, and possibly the shift to ride-shares weighed on sales in several countries.


Faced with sluggish demand for durable goods, firms scaled back industrial production. Global trade - which is intensive in durable final goods and the components used to produce them - slowed to a standstill.


Central banks reacted aggressively to the weaker activity. Over the course of the year, several - including the US Federal Reserve, the European Central Bank (ECB), and large emerging market central banks - cut interest rates, while the ECB also restarted asset purchases.


These policies averted a deeper slowdown. Lower interest rates and supportive financial conditions reinforced still-resilient purchases of nondurable goods and services, encouraging job creation. Tight labor markets and gradually rising wages, in turn, supported consumer confidence and household spending.

1 2
View single page >> |

Disclaimer: The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.

No content is to be construed as investment advice and ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.