Economic

Scenario

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2018 introduced and reinforced several challenges to the global economy. The escalation of issues like the global trade war and Brexit brought tension to markets in every region of the globe. After a strong period of optimism (specially in US), the stock market starts to accommodate and regional economies will likely slow their pace of growth to the following years.

Cuts to corporate and income taxes in the US, combined with one of the lowest unemployment rates in their history, resulted in GDP growth of 2.9% and expectations from 2.5 to 3% of growth for 2019. In the long term, US GDP is expected to be limited at 1.9% (CAGR).

China, impacted mostly by trade tensions with the US, showed growth of 6.6% in 2018 and in the long term its growth is expected to reach 4.7% (CAGR), heralding the arrival of a new level of economic maturity.

GDP GROWTH,
AVERAGE ANNUAL % CHANGE

Source: IHS Markit
 

As mentioned – for Europe – the biggest reason for uncertainty lies with Brexit. The high stability of both European and British society indicates that, despite some impacts, in the long term, their economies should accommodate the new geopolitical situation.

Emerging markets will continue to present some of the best alternatives for investment and growth around the world. Structural reforms are taking place in countries like Brazil and could move the region’s economy into a new era of development in the medium/long term.

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