Extra-Regional Updates

UK’s Outlook

The United Kingdom’s Economic growth is projected to increase slightly in 2019 before slowing in 2020, on the assumption that there is a smooth exit from the European Union. Some Brexit-related uncertainties will remain until there is clarity about future trading arrangements. An expansionary fiscal stance and a slow recovery in exports are expected to support growth, while the monetary stimulus will be gradually withdrawn. Inflation is projected to converge to 2% by the end of 2020.

With inflation above target and large uncertainties remaining, monetary policy should normalise at a very gradual pace. The fiscal impulse is expected to peak in 2019. The authorities should stand ready to respond further if demand weakens significantly as a result of Brexit. Economically, the preferred Brexit option should be to forge an agreement that will ensure the closest possible trading relationship with the European Union and high access for financial services to overseas markets. Temporary measures will be needed to cushion the economy and support displaced workers in the event of a no-deal exit.Read More...

France’s Economy

France’s  Economic growth is projected to continue at a pace of around 1½ per cent in 2019 and 2020. Still supportive financing conditions and business tax cuts will boost business investment, despite slowing external demand. Lower labour taxes, a more flexible labour market and improved training opportunities will help job creation, notably for low-skilled workers, supporting household consumption. Core inflation will strengthen, underpinned by the firming of the economy and a pick-up in wages.

The fiscal deficit will progressively decline, despite a temporary increase due to a tax credit reform in 2019. Consolidation efforts remain limited, though. A further reduction in non-priority spending is needed to put the public debt-to-GDP ratio, currently close to 100% (Maastricht definition), on a firmly declining path and sustainably finance ongoing tax cuts for businesses and households. In parallel, the government should continue to pursue structural reforms to generate more inclusive and sustainable growth.Read More...

China’s Decline

China’s economic growth slowed more than expected in the third quarter, as weak industrial output data and what the government called the "severe international situation" challenged efforts to stabilize the economy and reach its growth targets.

Gross domestic product increased 6.5 percent in the three months through September from a year earlier, compared to 6.6 percent in a Bloomberg survey and down from the 6.7 percent pace in the previous quarter. That’s the slowest since the aftermath of the global financial crisis in 2009.

The economy has faced increasing headwinds this year, with worsening trade tensions and a slumping stock market hurting confidence in the outlook. Those problems have prompted officials to step up stimulus and pledges of further support, but the impact of those measures has yet to kick in and more may be needed.Read More...

Latin America Growth remains lackluster

A preliminary estimate revealed that growth in the Latin American economy was unchanged in the third quarter, as uneven dynamics across economies kept activity moderate. FocusEconomics estimates that regional GDP growth (excluding Venezuela) came in at 1.6% year-on-year, matching the second quarter’s reading and one of the worst results seen in the past year and a half. A less favorable external backdrop and political noise likely held back growth, despite an improving labor market.

Looking at the economies with GDP data available, growth waned in Chile and Peru in the third quarter. Chile’s economy expanded at the slowest pace in a year as a sharp drop in copper exports and softer household spending dampened momentum. Similarly, Peru’s economy also slowed notably, growing at the softest pace since Q1 2017. The slowdown was driven by the domestic economy as softer confidence weighed on investment and household spending, while government consumption also contracted .Read More...

Ghana’s Economy to see 6.7% growth in 2019 - World Bank

Government has set a target of 6.8 percent growth in overall GDP, and a non-oil GDP growth rate of 5.4 percent for year-end 2018.

The World Bank has projected a 6.7 percent economic growth for Ghana in 2019, as it projects oil production to dissipate.

“Growth in Ghana is forecast to moderate from 6.9 percent in 2018 to 6.7 percent in 2019 as the effects of high oil production dissipate,” the World Bank said in its latest report this week.

In 2017 the country’s economy grew by 8.5 percent as against a 6.3 percent target, largely anchored on an increase in oil production volumes.

In monetary terms, the country’s economy (including oil), when adjusted to inflation, grew by some GHC56.3 billion compared to quarter four of 2016 when it grew by GHC 47.3billion.Read More...

Jamaica’s Flying Marks

The International Monetary Fund (IMF) has given high marks for Jamaica’s performance under the Stand-By Arrangement (SBA), saying programme implementation remains strong, with public debt firmly on a downward trajectory.

In its recently released Executive Board Review, the Fund highlighted that strong programme implementation continues to anchor macroeconomic stability.

“All quantitative performance criteria and structural benchmarks for end-December 2017 were met. Fiscal consolidation is ongoing; primary surplus is expected to be at least  (7)seven per cent of gross domestic product (GDP) in financial year (FY) 17/18 and a similar target is set in the FY18/19 Budget. Public debt is projected to be under 100 per cent of GDP by end-March 2019,” the report said.

The multilateral agency noted further that the unemployment rate is at a 10-year low, inflation and the current account are modest, international reserves are at a comfortable level, and external borrowing costs are at historical lows.Read More...

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