Global economic growth continued at a robust pace in 2018. The upturns in the United States and India made up for the moderate decline in growth rates in the European Union, China and various emerging markets. Growth rates for global industrial output and the worldwide volume of trade were both down compared with 2017, although they remained high thanks to capital expenditure and strong domestic demand in many economies.
The pace of growth tailed off over the course of the year. One of the main reasons was an increasing reluctance to invest in view of growing geopolitical and trade-policy uncertainties. The escalating trade dispute between the US and China led to greater doubt about the stability of the upturn, as did the difficult negotiations on the United Kingdom’s departure from the EU and the diminishing budgetary discipline in Italy. Deteriorating financial conditions in the emerging markets against a backdrop of higher inflation (predominantly driven by the oil price), interest-rate hikes and the negative balances of payments resulting from the resurgent US dollar also played their part in the slowdown. > DIAGRAM 004