Global economic growth is slowing, especially in advanced economies. The IMF projects global growth of 3.2% in 2019 and 3.5% in 2020. Growth in emerging markets remains higher at around 4-5% while advanced economies are expected to grow around 1.5-2%. Several factors are contributing to the slowdown, including falling global trade volumes, sharply lower bond yields signaling concerns about the global economy, and weaker euro area manufacturing outlook. However, the euro area unemployment rate remains at almost an all-time low and inflation expectations have declined.

1. Global economic outlook:
A European perspective
The Dallas Committee on Foreign Relations and
the Federal Reserve Bank of Dallas
– a joint event, August 19, 2019
Olli Rehn, Governor, Bank of Finland

2. | Unrestricted
Global growth has been slowing down,
especially in advanced economies
19.8.2019 2
2019: 3.2% (-0.1)
2020: 3.5%
World Output
2019: 1.9% (+0.1)
2020: 1.7%
Advanced Economies
2019: 4.1% (-0.3)
2020: 4.7% (-0.1)
Emerging Market and
Developing Economies
Source: IMF WEO update, July 2019.
-4
-2
0
2
4
6
8
10
1980 1990 2000 2010 2020
World Advanced economies Emerging and developing economies
%, annual growth rate
Source: IMF, World Economic Outlook.
32427@IMF(en)
GDP growth

3. | Unrestricted
Sharp fall in the growth of global trade
19.8.2019 3
-2
0
2
4
6
8
2012 2013 2014 2015 2016 2017 2018 2019
World trade Industrial production
Volyme, YoY, %
Source: CPB, Macrobond.
37072@mkteol%

4. | Unrestricted
Sharply lower bond yields do signal
concerns about the global economy
19.8.2019 4
-0,5
0
0,5
1
1,5
2
2,5
3
3,5
2018 2019
USA Euro Area
%
Source: Macrobond. 32427@vvk10
10-year Government Bond Yield

5. | Unrestricted
Euro area manufacturing: weaker outlook since 2018
42
44
46
48
50
52
54
56
58
60
62
64
66
2015 2016 2017 2018 2019
France Germany Italy Spain Euro area
Balance
Sources: Markit ja Macrobond. 32425@PMIteoll(en)
Purchasing Managers’ Index (manufacturing)
19.8.2019 5

6. | Unrestricted
Euro area unemployment: at almost all-time low
6
7
8
9
10
11
12
13
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Unemployment rate
%
* 12 month moving average.
Sources: Eurostat and ECB. 32424@Työttömyys_ea (2)_en
19.8.2019 6

7. | Unrestricted
Inflation expectations have declined in the euro area
1
1,5
2
2,5
3
2010 2012 2014 2016 2018
Market expectations, 5-year inflation 5 year ahead
SPF inflation expectations, 5 year ahead
%
Market expectations derived from inflation swaps. SPF = ECB survey of professional forecasters.
Sources: ECB, Bloomberg and calulations by the Bank of Finland.
32426@odotusSPF(2_en)
19.8.2019 7