Economic Environment in 2019

In a challenging environment characterized by a high level of uncertainty, the global economy is expected to grow by 2.8% in 2019, slower than in 2018 (+3.2%). In the European Union (E.U.), we anticipate weaker increases in both domestic demand and export demand from third countries. The United States will presumably deliver solid growth, although the stimulus effects of the tax reform should be less pronounced than in 2018. Growth in China will continue to cool but remain high compared with the advanced economies. The economic recovery in Brazil is expected to hold up. We expect growth in key customer industries to continue. For the automotive industry, we anticipate a slight recovery after lower production in the previous year. Global chemical production is forecast to grow by 2.7% in 2019, roughly at the same rate as in 2018 (+2.7%). For 2019, we expect an average oil price of $70 per barrel for Brent crude and an exchange rate of $1.15 per euro.

Our macroeconomic forecasts are based on the assumption that the trade conflict between the United States and its trading partners will ease over the course of the year, and that Brexit will occur without wider economic repercussions.

Trends in the global economy in 2019

  • Slower growth forecast for the E.U. and the United States
  • Growth moderation expected in China
  • Continuation of recovery in Brazil

Our forecasts for the E.U. assume that the United Kingdom will leave the E.U. in 2019, followed by a transitional period lasting until at least the end of 2020. The slowdown in growth already apparent in 2018 is likely to continue in the E.U. (the E.U. 27 and the United Kingdom1); however, we continue to expect moderate growth overall. Both export and domestic demand should see weaker growth. Germany in particular will be negatively impacted by slower growth in demand for investment goods, with GDP growth rates slightly below the E.U. average. As growth of eastern E.U. countries benefited particularly strongly from new inflows of E.U. cohesion and structural funds in 2017 and 2018, growth will presumably decline more strongly than in western Europe. For Russia, we expect weaker GDP growth compared with the previous year.

We are forecasting slower economic momentum for the United States, although this will still be significantly above the long-term average. The impetus from the tax reform should slowly taper off. Consumer purchasing power will presumably be curbed by higher prices as a result of the hike in import duties on Chinese goods, while wages continue to see only moderate gains.

Growth in the emerging markets of Asia is also expected to weaken slightly. Many Asian markets have close links to China through foreign trade, so the anticipated growth moderation in China is a major factor. We expect higher trade tariffs with the United States to dampen export demand and negatively impact investment propensity. However, the Chinese economy should be supported by income and sales tax cuts as well as tax concessions for the private sector. We anticipate growth of just over 6% for China (2018: +6.6%).

In Japan, growth is expected to remain at the low prior-year level. Domestic demand should remain stable, although capacity bottlenecks will have a dampening effect on growth. The expected slowdown in China will curb export demand. In addition, the sales tax will be raised in October 2019, which should lead to lower consumer demand in the fourth quarter.

In South America, we expect the recovery in Brazil to continue, provided the newly elected president pursues a liberal, reform-oriented economic course. By contrast, the Argentinian economy will likely continue to contract as domestic demand suffers from high inflation.

1 In the rest of this chapter, “E.U.” refers to the E.U. 27 and the United Kingdom.

Outlook for gross domestic product 2019

Real change compared with previous year

Outlook for gross domestic product 2019 (Real change compared with previous year) (bar chart)
Trends in gross domestic product 2019–2021

Average annual real change

Trends in gross domestic product 2019–2021 (Average annual real change) (bar chart)