{
  "title": "The Global Economy: A Delicate Moment",
  "publication": "IMF Blog, April 9, 2019",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2019/04/09/blog-the-global-economy-a-delicate-moment",
  "canonical": "https://www.imf.org/en/blogs/articles/2019/04/09/blog-the-global-economy-a-delicate-moment",
  "overlayPath": "/en/blogs/articles/2019/04/09/blog-the-global-economy-a-delicate-moment/index.md",
  "summary": "One year ago economic activity was accelerating in almost all regions; by the second half of 2018 the global expansion significantly weakened.",
  "sections": [
    {
      "heading": "Overview and recent drivers of slowdown",
      "content": "- One year ago economic activity was accelerating in almost all regions; by the second half of 2018 the global expansion significantly weakened.\n- Contributing factors:\n  - Escalation of US–China trade tensions\n  - Needed credit tightening in China\n  - Macroeconomic stress in Argentina and Turkey\n  - Disruptions to the auto sector in Germany\n  - Financial tightening alongside normalization of monetary policy in the larger advanced economies\n- These developments contributed to a notably weaker global expansion, especially in the second half of 2018."
    },
    {
      "heading": "Growth projections and key statistics",
      "content": "- The new World Economic Outlook (WEO) projects a slowdown in growth in 2019 for 70 percent of the world economy.\n- Global growth:\n  - 2018: 3.6 percent\n  - 2019 (projected): 3.3 percent\n  - Downward revision for 2019 from the January projection: 0.2 percentage points\n- 2020 projection:\n  - Global growth projected to return to 3.6 percent in 2020\n  - Recovery in 2020 is predicated on a rebound in emerging market and developing economies\n  - Emerging market and developing economies: 2019 projected growth 4.4 percent; 2020 projected growth 4.8 percent\n- Beyond 2020:\n  - Global growth expected to stabilize at around 3½ percent\n  - Growth in emerging market and developing economies expected to stabilize at 5 percent\n  - Low-income countries: varied outcomes with some commodity importers growing rapidly and others falling further behind in per capita terms\n- Regional and group outlook notes:\n  - Growth in advanced economies will slow slightly in 2020 despite a partial recovery in the euro area, reflecting fading US fiscal stimulus and modest potential growth due to aging trends and low productivity growth\n  - The recovery is precarious and relies on expected rebounds in Argentina and Turkey and improvements in other stressed developing economies"
    },
    {
      "heading": "Policy responses and near-term financial conditions",
      "content": "- Monetary policy accommodation:\n  - The US Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England shifted to a more accommodative stance.\n- China policy response:\n  - China has ramped up fiscal and monetary stimulus to counter the negative effect of trade tariffs.\n- Trade outlook:\n  - Prospects for a US–China trade agreement improved, helping overall outlook.\n- Financial conditions and real economy divergence:\n  - Policy responses have helped reverse tightening of financial conditions to varying degrees.\n  - Emerging markets: some resumption in portfolio flows, a decline in sovereign borrowing costs, and strengthening of currencies relative to the US dollar.\n  - Real economy indicators (industrial production and investment) remain weak in many advanced and emerging market economies; global trade has yet to recover."
    },
    {
      "heading": "Risks to global growth",
      "content": "- The baseline does not anticipate a global recession, but many downside risks exist:\n  - Trade policy tensions could flare up and spread to other areas (such as the auto industry), disrupting global supply chains.\n  - Growth in systemic economies (for example the euro area and China) could surprise on the downside.\n  - Heightened risks surrounding Brexit.\n  - A deterioration in market sentiment could rapidly tighten financing conditions amid large private and public sector debt, including sovereign-bank doom loop risks."
    },
    {
      "heading": "Policy recommendations and priorities",
      "content": "- Avoid costly policy mistakes; policymakers need to work cooperatively to reduce policy uncertainty and support investment.\n- Fiscal policy:\n  - Manage trade-offs between supporting demand, protecting social spending, and ensuring public debt remains on a sustainable path.\n  - The optimal fiscal mix depends on country-specific circumstances.\n- Financial sector policies:\n  - Address vulnerabilities proactively using macroprudential tools (such as counter-cyclical capital buffers).\n  - This is made more urgent by the possibility that interest rates will remain low for longer.\n- Monetary policy:\n  - Remain data dependent, be well communicated, and ensure inflation expectations remain anchored.\n- Structural and multilateral priorities:\n  - Actions to boost potential output, improve inclusiveness, and strengthen resilience across economies.\n  - Greater multilateral cooperation needed to resolve trade conflicts, address climate change and cybersecurity risks, and improve effectiveness of international taxation.\n- Contingent macro policy response if downside risks materialize:\n  - Policymakers may need synchronized though country-specific fiscal stimulus across economies, complemented by accommodative monetary policy, depending on circumstances.\n- Multilateral institutions:\n  - Adequate resources for multilateral institutions remain essential to retain an effective global safety net to help stabilize the global economy.\n\nSource: Gita Gopinath, April 9, 2019\n\n---\n\n\n References\n\n- عربي\n- 日本語\n- Português\n- World Economic Outlook\n- trade policy\n- investment\n- public debt\n- multilateral cooperation\n- https://www.imf.org/wp-content/uploads/2019/04/WEO-042019.jpg\n- How to Keep Corporate Power in Check\n\nSource: https://www.imf.org/en/blogs/articles/2019/04/09/blog-the-global-economy-a-delicate-moment"
    }
  ],
  "bullets": [
    "[Markdown version](/en/blogs/articles/2019/04/09/blog-the-global-economy-a-delicate-moment/index.md)",
    "[Structured JSON version](/en/blogs/articles/2019/04/09/blog-the-global-economy-a-delicate-moment/index.json)",
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    "Authors: Gita Gopinath",
    "Published: April 9, 2019",
    "One year ago economic activity was accelerating in almost all regions; by the second half of 2018 the global expansion significantly weakened.",
    "Contributing factors:",
    "These developments contributed to a notably weaker global expansion, especially in the second half of 2018.",
    "The new World Economic Outlook (WEO) projects a slowdown in growth in 2019 for 70 percent of the world economy.",
    "Global growth:",
    "2020 projection:",
    "Beyond 2020:",
    "Regional and group outlook notes:",
    "Monetary policy accommodation:",
    "China policy response:",
    "Trade outlook:",
    "Financial conditions and real economy divergence:",
    "The baseline does not anticipate a global recession, but many downside risks exist:",
    "Avoid costly policy mistakes; policymakers need to work cooperatively to reduce policy uncertainty and support investment.",
    "Fiscal policy:",
    "Financial sector policies:",
    "Monetary policy:",
    "Structural and multilateral priorities:",
    "Contingent macro policy response if downside risks materialize:",
    "Multilateral institutions:",
    "[عربي](https://www.imf.org/ar/News/Articles/2019/04/08/blog-the-global-economy-a-delicate-moment)",
    "[日本語](http://www.imf.org/ja/News/Articles/2019/04/08/blog-the-global-economy-a-delicate-moment)",
    "[Português](https://www.imf.org/pt/News/Articles/2019/04/08/blog-the-global-economy-a-delicate-moment)",
    "[World Economic Outlook](https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019)",
    "[trade policy](https://blogs.imf.org/2019/04/03/economic-forces-not-tariffs-drive-changes-in-trade-balances/)",
    "[investment](https://blogs.imf.org/2019/04/03/why-investment-may-come-under-threat/)",
    "[public debt](https://blogs.imf.org/2019/01/18/three-steps-to-avert-a-debt-crisis/)",
    "[multilateral cooperation](https://blogs.imf.org/2018/09/06/steering-the-world-toward-more-cooperation-not-less/)",
    "[https://www.imf.org/wp-content/uploads/2019/04/WEO-042019.jpg](https://www.imf.org/wp-content/uploads/2019/04/WEO-042019.jpg)",
    "[How to Keep Corporate Power in Check](https://blogs.imf.org/2019/04/03/how-to-keep-corporate-power-in-check/)"
  ],
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