The Strategist

ECB: Global economic growth will slow down in 2019


12/28/2018 - 10:44



Global economic activity is expected to slow down in 2019 and will remain stable thereafter, the European Central Bank (ECB) said in its economic bulletin.



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The weakening of political support in advanced economies and the impact of the trade conflict between the United States and China are putting pressure on global activity, the ECB said.

"The growth of world trade has slowed somewhat, and the uncertainty regarding future trade relations has increased," the bulletin says.

"Financial conditions in advanced economies remain stimulating, while they have tightened for some emerging markets," said the regulator.

The ECB predicts that global inflation pressure will grow slowly as reserve capacity shrinks.

The regulator also confirmed that net asset purchases will be discontinued by the end of December, despite the slowdown in economic growth in the region. At the same time, the Governing Council of the ECB intends to continue to reinvest the principal payments from the redemption of securities purchased under the asset buying program.

The ECB raised its inflation forecast for 2018 from 1.7% to 1.8%. The forecast for 2019 was reduced from 1.7% to 1.6%.

“Based on current prices of oil futures, inflation is likely to slow down in the coming months. Core inflation rates remain generally restrained, but domestic price pressure continues to increase and expand,” the central bank’s bulletin says.

"It is expected that core inflation will accelerate in the medium term, with the support of the ECB’s monetary policy measures, continued economic growth and wage increases," the regulator said.

source: reuters.com




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