Il Global Economic Outlook recently published by Atradius shows how global economic growth is experiencing a slight slowdown this year, due to the exhaustion of fiscal stimulus in the US. Furthermore, the uncertainties related to trade policies and the global turmoil have put trade under strong pressure: after growth of 3,4% in 2018, analysts - more pessimistically than the IMF (+3,3% in 2019) - they expect a slowdown to below 3%, before recovering slightly in 2020, in line with the improving outlook globally. However, significant downside risks still remain, even if the worst risks have abated somewhat. The main risk remains that of a spread of trade wars: the escalation of the tariff issue between China and the USA in May is proof that the situation has not yet been resolved. Furthermore, the risk of an escalation with Europe is more acute than ever. A slowdown in China's GDP growth is the second main risk, not to mention political uncertainty and oil price swings.
At the same time, the Eurozone is facing more moderate growth forecasts and continues to grapple with a climate of high political uncertainty linked to Brexit, Italy's budget problems and growing trade risks. Brexit-related uncertainty continues to weigh on business investment in the UK, although the improving external environment and moderate government support help to outline a stable outlook. Growth forecasts in the countries of the EME area are generally satisfactory, even if the drop in global trade and the persistent uncertainty are having their effect. While export growth remains under pressure, the positive trend continues to be supported by solid domestic demand. Fiscal and monetary stimulus in China will help foster strong growth rates in the Chinese economy, with a positive effect on many other EME markets. However, many individual economies continue to suffer from high debt levels, political risks and external vulnerabilities.
In this scenario, as reported by SACE, in March Italian exports remained stable compared to the same month of 2018, with a positive trend in the EU markets and a negative one in the non-EU area. At the sectoral level, the decline in capital goods weighed, which last year had recorded a sharp increase due to one-off transactions: overall in the first quarter, the value of Italian exports instead increased by 2%. The so-called "stock effect" due to the feared hard Brexit remains among the driving factors of exports to EU countries. France records values above the average (+2,3%) thanks to pharmaceuticals and fashion; Spain slightly down (-0,6%), but with machinery in sharp contrast (+8,1%). Among the best destination markets are Switzerland (+15,6%), Japan (+8,8%) and the USA (+6,7%). Türkiye and Mercosur, on the other hand, are down, while China is stable (+0,5%). The positive performance in India (+7,5%) is rather generalized at the sector level, led by metals, rubber and plastics and pharmaceuticals. The latter sector, together with food, is also growing in Germany, where however the trend remains moderate due to the decline in the automotive and electrical appliances, the same sectors that are reporting a marked contraction in Poland, testifying to the strong connection between Warsaw and Berlin.
It is the grouping of consumer goods that recorded the most significant positive variation (+6,9%), driven by non-durable goods (+8,2%), while the increase in durable goods was more limited (+0,9, 2%). Exports of the group of intermediate goods also grew (+0,2%), with a slight decrease in foreign sales of capital goods (-30%), testifying to the persistent and generalized weakness of the investment cycle. After the increase of about 2015% in the 18-2019 period, the pharmaceutical sector continues to drive Italian exports also in the first months of 15,3 (+1,7%), supported both by European markets such as France and Germany, and from India, Russia, China and the USA. The latter have also favored the export of textiles and clothing, together with Switzerland and Japan. On the other hand, the increase in mechanical engineering was more modest (+XNUMX%), with exceptions in India, Spain, the USA and Russia.
Already at the end of last autumn, a series of negative economic data added to the fears of a further tightening by the Central Banks. The level of confidence in the financial markets has started to show signs of deterioration, with cumulative losses of the S&P 500 index of 10% in December alone. It is evident that achieving peace, rather than a simple truce, on the US-China front, and being able to eliminate trade uncertainty between the US and the EU would give a major boost to the global economy; however, even if an agreement is reached, this may not be enough. According to Atradius, monetary policy makers may have done what needed to be done and may have run out of tools, in an environment that already sees low interest rates and liquidity injections. Only recently did the White House try to break the deadlock on an election pledge to build “roads, bridges and airports” as it pulled out of the Paris Accords. Efforts have also remained limited at the Eurozone level, although Germany's fiscal policy is currently moderately expansionary. Only China, which undoubtedly has more room for maneuver from a fiscal point of view, has gone further, both in terms of infrastructure, with the initiative “Belt and Road”, and in terms of energy transition.
Thus, the global economy will lose momentum in 2019 and 2020. However, despite a tumultuous start in the first months of the year, some developments in the policies implemented have helped to ease the climate of uncertainty. Central banks in all advanced markets have put their monetary normalization policies on hold and China has increased fiscal and monetary incentives to stimulate growth. The uncertainty related to the trade war continues to cloud the forecasts which, however, remain relatively positive. After the significant increase of 3,2% in 2018, world GDP growth is expected to slow to 2,7% in 2019, with a moderate recovery (+2,9%) in 2020. This year, advanced markets are experiencing a general slowdown, especially as regards the Eurozone economy, which is expected to grow by only 1,3% and 1,5% in 2020. As the effect of fiscal stimuli wears off, GDP growth of the US is expected to slow to 2,3% this year and 1,8% in 2020. In emerging markets, economic growth at lower margins this year, 4,3%, before regaining momentum (+4,7, 5,5%). Emerging Asia and Eastern Europe are also both expected to see a slight slowdown, to 2,5% and 2% respectively. Growth in Latin America and MENA markets should be more disappointing this year, while the Sub-Saharan African economy should benefit from an acceleration over the next two years. Finally, an increase in insolvencies is expected: this year insolvencies are expected to grow by XNUMX%, the first annual increase since the global financial crisis. Thanks to the easing of monetary tightening and the current lull in the trade war, risks for companies have reduced, but vulnerabilities, especially in terms of debt, continue to grow.
