Global, US Economies Should Be Fine Through 2019, Bank Says

Growth is expected to slow next year, though, according to BNP Paribas.

Fears are rife that the US economy, not to mention the whole world’s, will slip into recession as early as next year. But an influential global bank has a more optimistic view, at least for 2019.

According to France’s BNP Paribas, growth for the US’s gross domestic product will be 2.8% for this year, down from the heady 4.2% racked up in the second quarter. For 2019, GDP growth will slow by one percentage point, to 1.8%, said analysts at BNP, the globe’s eighth-largest bank, in a research report.

As for the world, BNP forecasted 3.6% growth this year and 3.4% next. That’s mainly powered by a still-strong showing in China (albeit slowing to 6.1% in 2019 from 6.4% in 2018) and accelerating growth in India (7.4% this year, 7.6% next).

BNP highlighted the opposing dynamics at work, with ongoing trade tiffs between the US and China, as well as the European Union and others, and rising interest rates on the minus side—against robust economic growth in much of the world.

“Global growth has shifted to a lower gear as trade-related uncertainty has compounded the impact of a moderate tightening in monetary conditions,” the report maintained. “For the rest of 2018, however, strong labor markets, positive sentiment, and a generally supportive policy mix look set to keep the pace of activity solid overall and above trend in most economies.”

Much of the world’s increasing inflation, and certainly that in the US, is owing to higher oil prices. But BNP expects that to ebb in 2019’s second half amid slowing economic activity.

The report contended that BNP sees “some scope for inflation to rise in the near term, reflecting reduced spare capacity. The upcoming growth slowdown, however, is likely to prevent a sustained price shock.”

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