According to the Fitch Rating report, the outlook of the global economy has significantly declined as a result of the US-China trade wars.
The report predicts the world growth rate in 2020 to fall to the lowest rate since 2012.
The world’s GDP growth forecasts for both 2019 and 2020 have been lowered by 0.2%. Global growth is predicted to fall to 2.6% in 2019 and 2.5% in 2020.
China’s growth forecast in 2020 is 5.7 %, down from 6.0% while Eurozone forecast is 1.1%, down from 1.3%. The US growth forecast in 2020 is 1.7%, a decrease of 0.1%. China’s slow growth will prolong the slump in global trade and manufacturing will later pressure Eurozone expansion.
Germany will also anticipate a technical recession in the third quarter of 2019 due to its highly open economy.
The United States may be deteriorating in exports, manufacturing and business investments but due to its closed economy, it continues to have strong consumer spending, a tight labor market and an expansionary fiscal policy and Fitch predicts a slowdown rather than a recession ahead.
For the global Central Banks, they have delivered the most rapid and geographically broad based shift to monetary policy easing since 2009.
Lastly, in the financial markets, the fitch report stated that the effects of the monetary policy turnaround have been observed as there has been a sharp decline in global bond yields.