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Slowing global economies point to future recession

Slowing global economies point to future recession

Illustration and Painting

The global economy started 2018 with strong, synchronised growth, but the momentum faded as the year progressed and growth trends diverged. Notably, the economies of the eurozone, the UK, Japan and China began to weaken.

The US economy accelerated due to fiscal stimulus, but with other key economies experiencing further deceleration, IHS Markit predicts that global growth will edge down from 3.2 per cent in 2018 to three per cent in 2019, and will keep eroding over the next few years. Combined with heightened political uncertainty in many parts of the world, these risks point to the increased vulnerability of the global economy to further shocks and the greater probability of a recession in the next few years. However, IHS Markit analysts note that chance of recession in 2019 is still relatively low.

Supply chain managers may face mixed blessings on the domestic front, based on estimates about sustainable growth in the labour force and productivity next year. IHS Markit assesses the potential growth in the US economy to be around two per cent. In 2018, US growth was a well above trend at 2.9 per cent, compared with only 2.2 per cent in 2017.