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2019/07/12 / Erste Group Research

Economic Outlook | Trade Dispute and Brexit are Driving the Outlook

The trade war between the US and China remains the most important factor for the economic outlook. As both sides are under pressure, we expect a rapprochement in the second half of this year. As a result of this we expect that the global economy will follow the favorable stock market trend and that the outlook for global growth will gradually improve in the second half of 2019.

In addition, we expect that the Brexit issue will determine the outlook for economic growth in the Eurozone until the end of October. In light of political developments in the UK (resignation of Theresa May in June) we expect a Hard Brexit on 31 October. As a result of this shock we expect slightly negative growth in the Eurozone in Q4 2019, followed by a gradual recovery beginning in Q1 2020.

We are forecasting a decline in the headline inflation rate to +1.4%, particularly due to a falling inflation contribution from the energy component in 2019.

US economic growth will slow down this year compared to last year. Interest rate markets in particular were recently quite jittery and seem to be seeing clear indications of a beginning downturn and are consequently pricing in a central bank response. However, we believe that the US economy will level out at a sustainable growth rate.

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General information

AuthorErste Group Research
Product nameEconomic Outlook Eurozone, USA
Topic in focusMacro/ Fixed income
Economy in focusEurozone, United States
Currency in focusEuro, US Dollar
Sector in focus-


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