THE GLOBAL ECONOMY IS EXPECTED TO GROW BUT AT A MODEST PACE

Expect the global economy to expand at a rate of around 3.2% this year in PPP (purchasing power parity) terms. Partly because of easy monetary policies across the globe, expect all of the major economies to grow. US GDP is likely to expand by around 2%, in line with its potential rate. Given the historically low unemployment rate, US employers will find it increasingly difficult to hire staff. More US cities have an  unemployment rate below 4% since when the data began to be collected in 1990. The Eurozone is expected to grow at approximately around 1%. Because of its sensitives to global trade flows, expect Germany to become more reliant on household consumption as a source of growth instead of net exports and investment. This could be challenging for the German economy as its households tend to save more than the European average. Even before details of the coronavirus were known, the Chinese economy was expected to expand by less than 6%. With India leading the way, the world’s six other largest emerging economies are all expected to grow this year.

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