The global economy continued an upbeat note from the pickup in global manufacturing and trade through 2017. As investors’ confidence in the global economic outlook lost steam, so did the upswing.
One reason behind the dipping economic growth in 2018 was the friction between major economies adapting protectionism policies in the form of tariff war especially the United States. The retaliatory measures were taken by others, including China and also India, brought in higher uncertainty which weighs on future investment decisions.
However, despite these actions, the US economy expanded at a fast pace in 2018, as tax cuts and spending increases stimulated demand. The US Federal Reserve has continued to raise the policy interest rate as a result. Interest rates on US long-term bonds have increased less, as investors see risks to future growth and value the safety of US Treasury securities.
As growth and interest rates in the United States have outpaced those in other major economies, the US dollar has appreciated against most other currencies in 2018.
Some developing market economies have come under strain as the US dollar strengthened and the level of risk that global financial investors were prepared to accept dropped. Most of these countries have seen increases in their external borrowing costs, but the extent of these increases varied widely.
At what pace will the world economy grow or dip this year? Do let's know your take.
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