The health of the global economy has been a top concern for investors in 2019. The latest reports from the International Monetary Fund (IMF) suggest that investors have a right to be concerned. The IMF downgraded their estimates of global growth last week, now predicting growth of 3.2% y/y in 2019, 0.1% lower than their previous forecasts in April. As we highlight in the below chart, should the latest IMF forecast be correct, it would be the weakest global growth since the financial crisis.

One of the biggest risks to the outlook is an escalation in trade tensions. The IMF expect global trade to grow at just 2.5% in 2019, a 0.9% downgrade from their April estimates. The World Trade Organization (WTO) cites further trade concerns in its latest report. In the last six months, WTO members have implemented 38 new import-restrictive trade measures, including import bans, tariff increases and import taxes. These new measures are estimated to impact $339 billion worth of trading volumes, 44% above the average since October 2012. Trade is vital for the health of many economies, particularly in emerging markets and trade barriers, once constructed, are not easy to remove. Their implementation is likely to slow economic growth further, suggesting a more challenging environment for financial market performance in the years ahead.

Trade tensions are weighing on global growth

Real Global GDP, %


Source: IMF, World Economic Outlook database, April 2019. *2019 is the IMF July 2019 forecast.
Data are as of July 24, 2019