Global Economy to Grow Moderately Next Year

KUALA LUMPUR, Nov 2 (Bernama) -- The global economy is expected to grow moderately next year, mainly supported by strong domestic demand in the emerging market and developing economies (EMDEs), in particular, China, India, Indonesia and the Philippines. On the contrary, growth in the advanced economies is projected to register a slowdown due to lower private consumption following normalisation of interest rates and waning fiscal stimulus, according to the 2019 Economy Outlook report released by the Ministry of Finance (MoF) on Friday. "Risks are skewed to the downside and growth remains vulnerable to changes in trade, fiscal and monetary policies, global financial conditions and geopolitical stability. "Trade tensions are expected to escalate in anticipation of additional protectionist and retaliatory measures posed by the US and its key trading partners, which may include expanding list of items that will be subjected to tariff rates increases," said the report. In addition, it said deterioration in global financial conditions due to rising corporate debt would weigh on investment, while emerging market imbalances due to weakening currency, as well as dollar-denominated debt, may caused a downward trend in growth. Furthermore, the report added that advanced economies' reliance on highly supportive macroeconomic policies is projected to hinder sustainable global growth. "For example, the fiscal stimulus in the US will lead to faster-than-expected interest rates increases, which may shrink capital flows to developing Asia. "In addition, prolonged geopolitical concerns in the Middle East and the possibility of more countries exiting the euro area are among the persistent risks," it added. According to the report, growth in the advanced economies is expected to expand by 2.4 per cent this year and 2.1 per cent in 2019, while that of the EMDEs is projected to be sustained at 4.7 per cent for both years. "Growth in the EMDEs is expected to be uneven due to various factors affecting the economies such as rising oil prices, higher yields in the US, appreciation of the US dollar, ongoing trade tensions and geopolitical conflicts," it added. -- BERNAMA