Growth in the first quarter turned out to be stronger than expected for many of the industrial economies.

Governments and central banks have become a bit less anxious because economic growth among many of the advanced economies improved in the first quarter of this year.

Global growth was slowing in the second half of last year, so the apparent growth rebound among some of the prominent countries in Q1 was very welcome.

Many of the advanced economies are operating with tight labour markets, low inflation and accommodative monetary policies, and the global economy is still projected to expand 3.3% this year and 3.4% in 2020.

The US economy’s growth is expected to slow sharply from the unexpectedly strong 3.2% annual expansion in the first quarter of this year. However, there were some unusual occurrences which boosted first quarter growth, including a massive surge in inventory accumulation due to the trade war worries. Both business investment and consumer spending weakened in the first quarter.

Because of continued trade uncertainties, inventories and imports will likely surge again in the second quarter, as stockpiles are reduced.

Nonetheless, on balance a slower growth outlook for this year was in the cards as the fiscal stimulus fades and as Trump’s tariffs constrain business investment and weaken manufacturing production.

The Euro Area economy also rebounded higher in the first quarter but is expected to slow over the balance of the year due to a difficult outlook for exports and capital investment.

The ECB is committed to keeping the economy growing and there has been some fiscal easing as well as a modest expansion in money wages which will support economic growth. However, there are a series of familiar risks to contend with, including escalating trade problems, slower growth in China, market volatility and a lingering weakness in the manufacturing sector. The Euro Area economy is projected to grow by 1.3% this year and 1.2% in 2020.

Brexit uncertainty probably accounts for some of the 1.8% annualized rebound in UK economy in the first quarter of this year. Government consumption growth edged up, fixed investment rebounded, and there was some stockpiling in preparation for a possible no-deal Brexit. Private consumption was also strong supported in Q1 by solid wage gains and the multi-decade low unemployment rate.

On the other hand, Britain’s external trade sector weakened because of a surge in imports—again tied to stockpiling. Of course, the economy is being restrained by tepid business investment and ebbing momentum in key trading partners such as the EU and US. We are expecting GDP growth in the United Kingdom of 1% in 2019 and 0.9% in 2020.

Major World Economies At A Glance: 2018-2020

(Real GDP, Annual % Rates of Change)

12 months % change and annual change.