PwC: Global economic growth expected to slow in 2019

PwC is an assurance, advisory and tax services network with more than a quarter of a million people working in 158 countries.

The firm believes that the pick-up in growth of most major economies seen between the end of 2016 and the beginning of 2018 is “now over.” In the United States, the “boost from fiscal stimulus is expected to fade, higher interest rates are likely to dampen consumer spending and a strong dollar will continue to drag on net exports,” PwC said in published summary, while projecting U.S. growth “will moderate from an estimated 2.8% in 2018 to around 2.3% in 2019.”

Growth in China will also slow relative to 2018, the firm said, despite government attempts to ensure the slowdown is minimal, “the impact of US tariffs and the need to control debt levels are likely to create a modest deceleration in growth in 2019.”

Labor markets in advanced economies are expected to continue to tighten, “with unemployment falling further even if job creation slows. This would push up wages, but cause problems for businesses looking to fill talent shortages.”

PwC also predicts unemployment will fall a little further in the United States and Germany.

“We expect this trend to gradually moderate in 2019 with some economies like the US, Canada and Germany hitting structural floors in their unemployment rates, and wage growth starting to gradually pick up. Assuming an orderly Brexit, we expect the UK to also see unemployment flattening off, though a disorderly Brexit could lead to a marked rise of unemployment,” said Barret Kupelian, senior economist at PwC.

The UK is set to fall in the rankings of the world’s largest economies. Both India and France are likely to surpass the UK in 2019, knocking it from fifth to seventh place in the global table.

“India is the fastest growing large economy in the world, with an enormous population, favourable demographics and high catch-up potential due to low initial GDP per head. It is all but certain to continue to rise in the global GDP league table in the coming decades,” commented Mike Jakeman, senior economist at PwC. “The UK and France have regularly alternated in having the larger economy, but subdued growth in the UK in 2018 and again in 2019 is likely to tip the balance in France’s favour. The relative strength of the euro against the pound is an important factor here. ”

The full predictions are available to read here pwc.com/GEW.