Will these major countries be richer or poorer in 2019?
Daniel Coughlin
20 December 2018
Next year's fastest and slowest-growing economies
The IMF has downgraded the global growth figure for next year from 3.9% to 3.7% due to increased protectionism, rising interest rates and weaker than expected Eurozone performance, but the world's economy is still going strong. We take a look at the estimated growth figures for 30 major economies and reveal which nations will be better or worse off in 2019.
Japan: 0.9%
After decades of stagnation, GDP growth in Japan remains lacklustre despite President Shinzo Abe's 'Abenomics' stimulus package, which was introduced in December 2012. The economy is set to grow by just 0.9% in 2019, down from 1.1% in 2018. The culprit? A hike in consumption tax scheduled for October that is expected to trigger a short-term slowdown.
Italy: 1%
Weak growth is also plaguing Italy, and though the nation is drowning in debt, the current populist government is planning to ramp up public spending, though the proposals have been scaled down after the EU voiced its opposition. As a result, growth is pegged at just 1% next year, the lowest rate in the Eurozone and EU as a whole, down from 1.2% in 2018 and 1.5% in 2017.
South Africa: 1.4%
After a long period of sluggish growth, the South African economy entered recession in the second quarter of 2018. The government has taken steps to revive the economy, which include setting up an infrastructure fund, but while growth is expected to rise to 1.4% in 2019, up from 0.8% this year, further action is required says the IMF to get the country's finances on an even keel.
Belgium: 1.5%
Belgium has a strong economy and growth has been consistent over the past few years, but the rate of expansion has been disappointing, caused in part by household consumption and productivity growth, which have tended to be relatively modest. GDP growth will remain constant at a rather mediocre 1.5% annually until 2020.
UK: 1.5%
Brexit uncertainty has hammered sterling, restricted investment in the UK and eroded consumer confidence, impacting economic growth. It is expected to level out at just 1.4% this year, rising slightly to hit 1.5% in 2019 – but that's only if a broad agreement can be reached. A no-deal Brexit would lead to "a significantly worse outcome" according to the IMF.
France: 1.6%
The French economy is expected to grow by 1.6% both this year and next. In April, the IMF downgraded its growth forecast for France for this year by 0.3% as the Trump administration tariffs on European steel and aluminium imports kicked in, while the recent gilets jaunes (yellow vests) protests have further dampened the economy.
Finland: 1.8%
Economic growth in Finland is expected to top 2.8% this year, but the nation's GDP is forecast to expand by a less robust 1.8% in 2019. Demand for Finland's exports is anticipated to slow down next year as protectionism increases, though unemployment is projected to fall from 7.7% in 2018 to 7.4%.
Portugal: 1.8%
The Portuguese economy has been in recovery mode over the past few years. Unemployment has dropped from 17% in 2013 to 7% this year, and the country's government has recently paid off its punishing IMF loan. GDP growth has been strong with this year's IMF forecast of 2.3% within the ideal 2% to 3% growth range, but growth is expected to fall to 1.8% in 2019 as the pace of recovery slows.
Switzerland: 1.8%
The IMF has upgraded its forecast for Switzerland this year with the country's economy projected to expand by a not too shabby 3%, but the rate for 2019 has been slashed from 2% to 1.8% with growth levelling out at 1.7% until 2023. A slowdown in construction, tumbling exports and a stronger Swiss franc are the key factors behind the predicted drop.
Russia: 1.8%
Plenty of economies in our round-up have seen their growth forecasts for next year downgraded, but the Russian economy bucks the trend. The IMF has raised its projection from 1.5% to 1.8%, up from 1.7% in 2018, thanks to recovering oil prices and better than anticipated domestic demand.
Denmark: 1.9%
Denmark's economy is expected to grow by 1.9% in 2019, bang on the Eurozone average, which also mirrors the Danish GDP growth rate this year of 2%. While the country's economy is set to remain in good shape, growth is likely to slow further in the coming years as increased protectionism, including Brexit, hampers world trade.
Germany: 1.9%
Like its neighbour France, Germany has been on the receiving end of an IMF downgrade, with its projected GDP growth rate revised down to 1.9% from 2.2% for this year, as well as 2019. A massive exporter, Germany is likely to be hit harder than most nations by protectionist trade policies.
Canada: 2%
Canada's economy is set to expand by 2% in 2019, but though this figure is within the ideal range, it's lower than this year's growth rate of 2.1%, and last year's rate of 3%. Canada escaped a downgrade in October due to the signing of United States-Mexico-Canada Agreement (SMCA), the 'new NAFTA', which is expected to boost the economy and soften any trade war fallout.
Norway: 2.1%
The increase in global oil prices, which hit a four-year high in October, is working wonders on the Norwegian economy, which is also benefiting from strong domestic demand and favourable economic policies. The IMF expects this year's GDP growth rate to reach 2% and increase by 0.1% to 2.1% in 2019.
Austria: 2.2%
Austria's economy has been in excellent shape since 2017 when growth accelerated to 3%. The momentum has carried on into 2018 with this year's rate projected to remain at 3%, though the pace of expansion is set to slow in 2019. Be that as it may, 2.2% is still an enviable GDP growth rate.
Spain: 2.2%
Spain will boast one of the fastest-growing Eurozone economies next year according to the IMF. The Spanish economy has bounced back spectacularly over the past few years following the painful 2008–2014 financial crisis, and is expected to grow by 2.7% this year, falling to a very respectable 2.2% in 2019.
Sweden: 2.2%
GDP growth has also been strong in Sweden. Buoyed by a super-loose monetary policy, the Nordic nation's economy expanded by 2.4% this year and is projected to remain in the ideal zone in 2019 when it drops 0.2% to 2.2% as a result of an expected fall in exports and house prices.
Brazil: 2.4%
The IMF has cut its GDP growth prediction for Brazil this year by a whopping 0.9%. The revised figure of 1.4% for 2018 has been put down to May and June's truck driver strike, which caused massive disruption, effectively paralysing the economy. Luckily, full steam-ahead growth is projected to resume in 2019 when it's expected to hit 2.4%.
Greece: 2.4%
The Greek economy has been brought back from the brink in recent years with market-friendly labour reforms, falling unemployment and rising exports driving steady growth. The IMF expects the rate to level out at 2% growth this year and rise to 2.4% in 2019, a marked upgrade from earlier this year when 2019's rate was projected at only 0.8%.
Mexico: 2.5%
Uncertainty related to Mexico's trading relationship with the US has impacted the country's economy this year, but the signing of USMCA in October has alleviated many concerns. Helped along by resilient domestic demand, the Mexican economy is set to grow by 2.5% in 2019, up from 2.2% this year.
Singapore: 2.5%
While Singapore may have one of the strongest economies in Asia, the IMF recently downgraded its 2019 GDP growth forecast for the city-state by 0.2%. Again, the prospect of increased protectionism, which will harm Singapore's exports, is to blame. As it stands, while 2018 saw growth of 2.9%, it is projected to drop to 2.5% in 2019.
USA: 2.5%
The world's largest economy expanded at its fastest rate since 2005 this year, with GDP growth expected to top out at a very decent 2.9%, but the figure for 2019 has been revised down 0.2% to 2.5%. As you might have guessed, increased protectionism, more specifically the Trump administration's trade war with China, is fuelling the slowdown.
Netherlands: 2.6%
The economy of the Netherlands is projected to fall back by 0.2%, dropping from 2.8% this year to 2.6% in 2019. Brexit, particularly a no-deal Brexit, is likely to be especially damaging for the Dutch economy, which is one of the most exposed in Europe. In fact, the Netherlands' GDP could contract by a hefty 1.2% as a consequence of the UK's exit from the EU.
South Korea: 2.6%
The IMF slashed its predicted growth rates for South Korea in October to take into account the trend for increased protectionism around the globe, which is disrupting world trade. The figure for 2018 was revised down from 3% to 2.8%, while next year's GDP growth rate was cut by 0.3% to 2.6%.
Australia: 2.8%
The IMF also trimmed Australia's expected GDP growth rate for this year and next back in October. Just like South Korea, the Australian economy is being adversely affected by rising protectionism around the world, though growth remains robust. This year, the rate is projected at 3.7%, falling to 2.8% in 2019, down 0.2% and 0.1% respectively from the IMF's earlier forecasts.
New Zealand: 3%
Staying Down Under, the New Zealand economy is expected to outshine Australia's in the growth stakes next year. The IMF actually upgraded the forecast for this year and next in October, with New Zealand's economy poised to expand by 3% in 2018 and 2019. Key growth drivers include strong domestic demand and the ongoing construction boom in the country.
Poland: 3.5%
The only EU member state to escape a recession in 2008, Poland has recorded steady economic growth for 26 consecutive years. Growth is expected to level out at 4.1% this year before slipping back to 3.5% in 2019. By 2023, the rate is likely to fall to 2.8% according to the IMF as labour shortages, slowing productivity and a reduction in private investment begin to bite.
Ireland: 4%
Ireland has enjoyed stellar economic growth since the nation exited the EU/IMF bailout in 2013. This year, the figure is expected to top 4.7%, while growth is set to fall to 4% in 2019. A no-deal Brexit, however, would be “a significant shock” to the Irish economy warns Paschal Donohoe, the country's Minister of Finance.
China: 6.2%
Next year, the mighty Chinese economy is set to expand at its slowest rate since 1990, with GDP projected to grow by 6.2%, a downgrade on the 6.4% the IMF forecast in July and a drop of 0.4% compared to 2018. The world's second-largest economy is feeling the effects of the trade war with the US, as well as weak credit growth.
India: 7.4%
The fastest-growing major economy on the planet, the Indian economy is positively flourishing. A number of growth-friendly government policies have been introduced and foreign investment is on the up, bolstering the nation's output and finances. This year, the rate of growth is projected to hit 7.3%, rising to a bumper 7.4% in 2019.
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