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Global Macroeconomic Outlook 2019
Fastmarkets RISI – PPI Transport Symposium
Lasse Sinikallas, Director of Macroeconomics
2019 | Fastmarkets | Macroeconomic Outlook 2019
Global economy growing moderately, risks heightened
2019 | Fastmarkets | Macroeconomic Outlook 2019
1.6 %2.3 %
2.9 % 2.6 %
1.1 %1.8 %
2016 2017 2018 2019 2020 2021
USA1.9 %
2.5 %
1.8 %
1.1 % 0.9 %1.4 %
2016 2017 2018 2019 2020 2021
Europe
6.7 %6.9 %
6.6 %
6.2 %6.0 % 6.1 %
2016 2017 2018 2019 2020 2021
China
-0.9 %
1.1 % 0.9 % 0.8 %1.7 %
2.8 %
2016 2017 2018 2019 2020 2021
Latin America
Annual real GDP growth
2
Oil prices are volatile and remain relatively low
3
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
WTI Brent
2019 | Fastmarkets | Macroeconomic Outlook 2019
Elevated global economic policy uncertainty
4
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
US Three Component Index US News Based Index Global Index (current)
Source: Measuring Economic Policy Uncertainty by Scott Baker, Nicholas Bloom and Steven J. Davis at www.PolicyUncertainty.com.
2019 | Fastmarkets | Macroeconomic Outlook 2019
US: Good performance, slowdown ahead?
2019 | Fastmarkets | Macroeconomic Outlook 2019 5
US job growth continues
-800
-600
-400
-200
0
200
400
600
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Employment change Six-month moving average (employment change) 24-month moving average (employment change)
2019 | Fastmarkets | Macroeconomic Outlook 2019 6
Monthly employment change, total non-farm, thousands; six-month moving average; 24-month moving average
Industrial production now supported by policy?
30
35
40
45
50
55
60
65
70
0.85
0.90
0.95
1.00
1.05
1.10
1.15
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Industrial production (L) PMI (R)
2019 | Fastmarkets | Macroeconomic Outlook 2019 7
Index of industrial production, January 2012 = 1.00; PMI
Dollar regained strength in 2018, remains strong
80
90
100
110
120
130
140
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
8
Trade weighted US dollar index: broad, goods, 1997=100
2019 | Fastmarkets | Macroeconomic Outlook 2019
Investment growth slowing down
80
90
100
110
120
130
140
-40%
-30%
-20%
-10%
0%
10%
20%
30%
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Private residential fixed investment Private nonresidential fixed investmentTrade weighted US dollar index: Broad, goods (R)
2019 | Fastmarkets | Macroeconomic Outlook 2019 9
Fixed investment, percent change year/year, seasonally adjusted annual rate, USD Index
US GDP growth expected to slow
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
10
Real GDP growth, annualized percentage change
2019 | Fastmarkets | Macroeconomic Outlook 2019
Europe: Loss of momentum
2019 | Fastmarkets | Macroeconomic Outlook 2019 11
European industrial production hit the breaks in 2018
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
EU-27 (from 2019) EU-28 Euro area (19 countries) Germany France United Kingdom
12
Volume index of production, year-over-year percentage change, calendar adjusted
2019 | Fastmarkets | Macroeconomic Outlook 2019
Euro has lost some of the strength of early 2018
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
$1.60
$1.70
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
USD/EUR
132019 | Fastmarkets | Macroeconomic Outlook 2019
Euro area GDP growth slower
-8%
-6%
-4%
-2%
0%
2%
4%
6%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Germany France Italy UK Eurozone
14
Real GDP growth, annual percentage change
2019 | Fastmarkets | Macroeconomic Outlook 2019
China: Trade war dampening the economy
2019 | Fastmarkets | Macroeconomic Outlook 2019 15
Chinese industrial sector has cooled down
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Fixed asset investment Industrial production PMI (R)
16
Year-over-year growth in industrial production, fixed asset investment; Purchasing Managers Index
2019 | Fastmarkets | Macroeconomic Outlook 2019
Volatility in Chinese trade growth and renminbi strength
¥5.0
¥5.5
¥6.0
¥6.5
¥7.0
¥7.5
¥8.0
¥8.5
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19Exports Imports RMB/USD
17
Exports and imports, year-over-year percentage change, RMB/USD
2019 | Fastmarkets | Macroeconomic Outlook 2019
High lending, increased debt risk
0%
5%
10%
15%
20%
25%
30%
35%
-¥800
¥200
¥1,200
¥2,200
¥3,200
¥4,200
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Aggregate financing (L) New loans (L) M2 (R)
18
New bank loans, aggregate financing, billion renminbi; money supply, year-over-year percentage change
2019 | Fastmarkets | Macroeconomic Outlook 2019
Chinese GDP trending lower, 2019 a slowdown
0%
2%
4%
6%
8%
10%
12%
14%
16%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
19
Real GDP growth, annual percentage change
2019 | Fastmarkets | Macroeconomic Outlook 2019
Latin America: Improving, with challenges
2019 | Fastmarkets | Macroeconomic Outlook 2019 20
Improving domestic environment should help Latin American economy despite global slowdown
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
21
Latin America, real GDP growth*, annual percentage change
2019 | Fastmarkets | Macroeconomic Outlook 2019
* Measured at purchasing power parity exchange rates.
Inflation slowing, except in Argentina
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
Brazil Argentina Chile Mexico
22
Consumer price indexes, year over year percentage change
2019 | Fastmarkets | Macroeconomic Outlook 2019
Investment remains low in Latin America
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2010%
15%
20%
25%
30%
35%
Advanced economies Emerging market and developing economiesLatin America and the Caribbean ArgentinaBrazil Chile
23
Investment as percentage of GDP
2019 | Fastmarkets | Macroeconomic Outlook 2019
Mexican exports supported by US consumption, production growth negative
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Industrial production year-over-year growth (R) Exports year-over-year growth (L)
24
Monthly indicator of economic activity, Imacec, 2013=100
2019 | Fastmarkets | Macroeconomic Outlook 2019
Conclusions
2019 | Fastmarkets | Macroeconomic Outlook 2019 25
Conclusions
• World economy expected to decelerate 2019, 2020
• US economy projected to slow down Still healthy domestic economy
• China moving toward consumer-led growth Trade war, continued slowdown, debt a major risk
• Europe’s momentum slower, still growth Unemployment low, policy uncertainty
• Latin America improves, but challenges remain Politics, global slowdown impact
2019 | Fastmarkets | Macroeconomic Outlook 2019
Risks
• Trade policy issues and trade war Uncertainty slows growth
• Central banks’ ability to continue stimulus
• Pace of GDP growth deceleration in China
• Low inflation
• Overall political uncertainty
• Geopolitical tensions
2019 | Fastmarkets | Macroeconomic Outlook 2019