The German economy contracted slightly in the third quarter of 2018. Seasonally adjusted real gross domestic product declined by 0.2% compared to the previous quarter. Foreign trade's contribution to growth was negative for the third time in a row. We have significantly revised our forecast downwards for this year's economic growth from 2.0% to 1.6%.
The midterm elections and the resulting Democratically controlled House does not change our US economic outlook. GDP is still expected to grow by 2.9% in 2018, and 2.5% in 2019. However, businesses could be affected by policy shifts in six areas: infrastructure spending, regulation, taxes, public budget, trade and immigration
Seasonally adjusted industrial production rose by only 0.2% in September compared with the previous month. On average in the third quarter, production was thus 0.9% below the level of the second quarter. It last recorded a similarly weak development in the second quarter of 2014.
On Sunday October 28 th, Brazil traded a step back in time for a leap of faith into the unknown. The people ditched another workers’ party (PT) presidency and elected Jair Bolsonaro. The business community embraced the sheen of a self-designated ultraliberal over the nostalgia of a left-wing statist.
The ECB has committed itself to reinvesting the principal from maturing securities purchased under the Asset Purchase Program (APP) since 2014. But with monthly net purchases expected to end after an almost four-year run come January, the reinvestment policy will now take center stage in determining financial conditions in the eurozone until at least September 2019 when we expect the ECB to implement its first timid rate hike.
A cyclone is brewing in the global economy. The US – with its erratic policy-making causing major shocks of uncertainty – is in the eye of the storm, sending headwinds toward the rest of the world. While China, Japan and the Eurozone are in the stable vortex of the cyclone, able to absorb the shocks, emerging markets are in the unstable vortex, leaving them in a vulnerable position. Nevertheless, we predict the global economy can weather this storm, with world GDP growth expected to remain resilient in 2018 and 2019.
Turkey’s currency crisis became full-fledged in August amid an ongoing withdrawal of global liquidity stemming from continued monetary tightening in the U.S. as well as lasting economic policy mistakes.
Financial assets of households rose by a significant 7.7% to EUR 168 trillion in 2017, supported by synchronized economic recovery and strong financial markets according to the ninth edition of the ‘Allianz Global Wealth Report’. However, first data for 2018 suggests a much reduced growth. The report puts the asset and debt situation of households in more than 50 countries under the microscope.