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Global economy shows growth in first quarter against previous forecast

Global economy shows growth in first quarter against previous forecast

May 10, 2019, | SQUARED DIRECT – Recently the US, the EU, and China, three of the world’s largest economies, have released their quarterly reports which show rising growth rates against previous estimates and expectations of a further slowdown based on disappointing data from the last quarter of 2018.

World economic outlook & prospect

 Despite rising US interest rates and concerns over trade wars and rising oil prices, the US economy is growing at a rate of 0.8 percent. Some consider the boost temporary, but the growth rate is too strong to be ignored.

Additionally, the US Labour Department reported that the official unemployment rate has fallen to 3.6 percent, the lowest since 1969.

The Eurozone is growing at 0.4 percent. The Italian economy quickly overcame its recession and is growing at 0.2 percent over the previous quarter with a recorded increase in exports. The Spanish economy, also recently recovering from a decade long recession, has a growth rate of 0.7 percent for the first quarter.

The German economy report is yet unreleased but is expected to show positive data as well. Including the UK, the economy of the EU is growing at a 0.5 percent rate overall. Only the French economy is showing signs of instability because of domestic uncertainty on economic policies.

The Chinese economic growth rate has stabilized at 6.4 percent after Bejing avoided to inflate debt and took specific steps to invigorate the economy.

Trade wars with the US has impacted the demand for Chinese exports on a global scale however production is rising at 8.5 percent since China is now seen as trying to turn inwards focusing on domestic consumption instead of being dependent on exports.

Even though economists are concerned about the validity of data released by the Chinese government, most agree that such reported performance is indicative of rising growth for the second largest economy of the world.

The markets are also reacting favorably with stock markets and equity markets becoming hot. The MSCI World Equity index has risen 21 percent since the last quarter. Investors are equally surprised and start wondering whether this positive turn of events will last.

Turkish economy faces serious recession

However, not everything is going well for some economies like the Turkish economy which is facing a serious recession and severe flight of capital mostly to Asian countries, the South Korean economy and the heavily sanctioned economy of Iran, an OPEC member, which in turn can affect global economic growth rates in the long run.

Does all this mean that the global economic slowdown is over for good? Some analysts have already expressed their concerns regarding the stability of this unexpected growth saying that while growth has stabilized the slowdown in imports has not, but others have expressed their optimism for the rest of 2019.

After the first quarter’s positive results, many banks and financial institutions upgraded their forecasts for the rest of the year however economic indicators by the OECD are still foreshadowing a negative turn of events.

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