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Global Economic Outlook 2019

2018 saw strong growth while leading to a maximum of uncertainty. World growth in 2018 reached again a high level of +3.1%. Yet it nurtured uncertainties on the possibility of a trade war, non-viable US and European fiscal policies, the Fed’s too high assertiveness, emerging markets’ resilience, the multiplication of political risks and a potential burst of the global credit bubble. 2019 will be a denouement year on all these thorny issues. It should lead to a soft landing of the world economy.

Germany: Economic stuttering but no slump ahead

At 1.5%, the German economy last year recorded its weakest GDP growth since 2013. Calendar-adjusted GDP growth also expanded by 1.5% following a whopping 2.5% in the previous year. 

The View: Global Insolvencies Outlook

We see business insolvencies to rise for the third consecutive year in 2019 (+6%). The softening economic momentum, coupled by the global tightening of financing conditions, will drive up insolvencies in a majority of countries. 

Financial assets: Weakest growth in seven years

The financial assets of German households – despite significant losses in the last quarter – will remain above the 6 trillion mark in 2018, but only just: by the end of the year they should be around EUR 6,010 bn.

Global Economic Outlook update (Q4 2018)

Global growth to remain on a healthy trajectory despite the multiplication of risks:

Self-correcting mechanisms: US fiscal and monetary fuses to preserve  the economic circuit from systemic unsustainability

Fine-tuning policy tools: Fueling demand in the short-term and repairing supply in the medium-term will be the leitmotiv of China and Europe

Technical inspection: The market will continue to differentiate defective emerging economies from sound ones

Eurozone Bond Proposals Overview

Since the start of the Euro-crisis in the aftermath of the Great Recession, policy makers and economists alike have put a variety of proposals for eurozone reform on the table. Facing refinancing problems, the doom loop between banks and sovereigns as well as a lack of fiscal discipline, particular attention has been paid to new types of government bonds. 

Germany: Economic cycle risk politics

The sentiment in the German economy continued to deteriorate in December. The ifo business climate index fell to its lowest level for more than two years. 

ECB Preview: Starting Shot for the Great Unwind

Whereas 2018 will be known as the year when the ECB reached the end of its monetary easing path – with the cessation of QE net purchases under which the ECB accumulated a bond portfolio worth €2.6 trillion over the course of close to four years – 2019 will mark the beginning of monetary tightening.

Construction Report: Soft landing with a loose seatbelt

After ten years of growth (2008-2018), we have reached the peak in the global construction cycle. This year will be the turning point for the global construction industry, beginning to cool down gradually to +3% y/y in 2019, from +3.5% y/y in 2018. Over the past decade, most of the growth came from emerging markets (+57% since 2008), while the developed markets have not even fully regained their pre-crisis volumes. 

Economic Insight: Germany - Growth with obstacles

The world economy continued to grow strongly in 2018. Global economic output is likely to have increased by 3.1%, after a plus of 3.2% last year. While economic momentum in the USA even accelerated due to a strongly procyclical fiscal policy, growth slowed in most other economic regions.