Key points

  • While macro data have been scant and mixed, the US Federal Reserve surprised with a very dovish tone
  • Eurozone GDP ended 2018 in line with our expectations, with Italy in recession but France and Spain showing upside resilience. We see further slowdown ahead for the region
  • The Brexit saga’s latest episode provided little clarity, although the clock keeps ticking 
  • Beyond the year-end technical rebound, Japanese growth should remain low
  • China closed 2018 at 6.4% growth, the weakest in almost a decade but bank loans are accelerating encouragingly
  • Similarly, indicators in other emerging markets pointed to a potential further economic slowdown ahead

Our January Investment Strategy published last week generated multiple comments in a welcome wave of interest for the current macroeconomic backdrop. As we wrote back then, the past two months have seen the consensus forecast move closer to the one we published in November with our 2019 Outlook, with then (and still now) sub-consensus GDP growth forecasts for the US, the Eurozone and China. 

Unsurprisingly, this generalised downgrade of macroeconomic forecasts has been accompanied with a shift in worries, from whether we were exaggerating the slowdown to the possibility that recession is already upon us. In this Global Macro Monthly, we review our  macroeconomic analyses for each region and update our growth forecasts incorporating the latest data, from GDP figures for the final
quarter of 2018 to business surveys and monthly activity indicators. Altogether, we end up rather comfortable with our previous numbers: the US slowing to 2.2% this year (still above potential growth) and not hitting recession over the next twelve months, Eurozone growth further down to 1.2% (after 1.8% in 2018) and China slowing to 6.1% (after 6.5%).

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