Future Economic Outlook for the Global Economy

Running head: BUSINESS ECONOMICS
Business Economics
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1BUSINESS ECONOMICS
Table of Contents
Introduction................................................................................................................................2
Discussion of macro variables...................................................................................................2
GDP growth...........................................................................................................................3
Inflation..................................................................................................................................4
Labor market outlook.............................................................................................................5
Policy Challenges.......................................................................................................................6
Policies for advanced countries..............................................................................................6
Policies in emerging market and developing economies.......................................................7
Conclusion..................................................................................................................................9
Reference list............................................................................................................................11

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Introduction
The paper aims to provide a brief summary of future economic outlook for the global
economy for the coming years. In determining performance outlook for the global economy,
focus should be given on identifying performance trend of countries belonging to different
groups. There is an overall gloomy outlook of the global economy. Global economic
activities are on a moderating trend. Along with this, the accumulated risks have darkened
future economic prospects. Cross border, investment and international trade have softened
resulting in a slow economic growth. The emerging and developing economies are
undergoing several financial pressure. Under this circumstances, the emerging and
developing countries lost momentum of economic growth. The recovery of commodity
exports has also taken place at a slower than expected rate. Contraction of both import and
export have resulted in a contraction of overall trade. Disorderly developments in the
financial market have disrupted economic activity of the affected nations (worldbank.org
2019). This has a contagion effect on related economies. The disputes related to trade among
different nations could be escalated or spread more widely resulting in a negative spill over
on global economy. All these issues need to be resolved with the aid of appropriate policy
tool. Immediate policies are to be taken by the policymakers in emerging and developing
economies to reduce the stress in the financial markets, rebuild the macroeconomic policy
perspective, and manage the consequences of debt dynamic along with a sustained low
inflation. Global Macroeconomic outlook report is prepared taking into consideration the
current state of the global economy and projection has been made for near future.
Discussion of macro variables
Evaluation of economic performance needs evaluation of performance trend of
different macroeconomic variable. In this connection, three major macroeconomic variables

3BUSINESS ECONOMICS
that need to be considered are GDP growth, inflation and unemployment. Gross Domestic
Product is regarded as a composite measure of determining values of all the produced goods
and services in a nation (Gottheil 2013). Growth in GDP is the percentage change of
aggregate output from one year to another. Rate of growth in GDP is considered as a measure
of economic growth of a nation. Rate of inflation is a measure used for capturing movement
of price level in a nation. The variable unemployment indicates labor market performance of
the economy. Policymakers generally aim to ensure a steady long run growth along with a
low inflation and low unemployment (Case, Fair and Oster 2014). Apart from these three,
other important macroeconomic variables are exchange rate, interest rate and others.
GDP growth
Evidences from the past few years have revealed a weak expansion of global
economic activity. In October 2018, the global growth was estimated to be 3.7 percent.
Despite weak performances in some economies especially in Europe and Asia, there is
average growth of 3.7 percent for the global economy. The projected growth rate for global
economy in 2019 and 2020 are 3.5 percent and 3.6 percent respectively. The projected
growth rate below the growth expectation in October 2018. In response to growing trade
tensions between China and United State, there is a downward revision of projected
economic growth in the two consecutive year of 2019 and 2020 (imf.org 2019). Tariff
imposed by United State and associated retaliation by China triggered a trade war between
the two nation having an adverse trade effect across the globe. Since the second quarter of
2018, there is a soft momentum in global economic growth. The trend has been followed in
Germany due to implementation fuel emission standard for automobiles (Michelsen et al.
2018). It Italy, gloomy outlook of economic growth has been developed due to accumulation
of sovereign and financial risk that have weighted out domestic demand. This has also