On a country level, the prospects for Germany in particular are poor. The IMF expects growth of +0.5% for 2019 and +1.2% for 2020 (previously +1.7%). The figures illustrate Germany's dependence on its export markets. Globally, growth is forecast to reach +3.0% in 2019, the lowest level since 2008/09 and a downgrade of -0.3% from the IMF's April 2019 World Economic Outlook. It is to accelerate to +3.4% by 2020, mainly due to a forecast improvement in economic performance in a number of emerging markets in Latin America, the Middle East and Europe's emerging and developing economies. However, given the uncertainty about the outlook for several of these countries, a projected slowdown in China and the United States, and high downside risks, global activity may slow significantly. To prevent such a slowdown, the IMF recommends reducing trade tensions, reviving multilateral cooperation and, where necessary, stimulating economic activity through public investment. Monetary policy, on the other hand, should not be the sole support.
The British pound has recovered +5% since its recent low against the US dollar and is now at a five-month high, driven by rare signals of progress on the treatment of the intra-Irish border. London and Brussels have indeed clarified many differences over the last 48 hours, Bloomberg said. An agreement with the European Union seems to be drawing ever closer. Nevertheless, this is only the first hurdle for British Prime Minister Johnson, as he still has to convince various wings of British politics of the new treaty. The most important stakeholders are the Northern Irish Democratic Unionist Party (DUP), which supports Johnson's minority government, and his own conservative party. The initial situation seems to have improved. The prime minister wants to put the new deal to vote next Saturday in a special meeting of the House of Commons so that all deadlines can be met. However, the Johnson government has repeatedly reiterated that the United Kingdom will leave the European Union on 31 October – just fifteen days away – either way. In this regard high-ranking EU officials have sent contradictory signals. Some said it was feasible, others thought it was unrealistic.
In its new October report, the Mannheim Centre for European Economic Research (ZEW) left no doubt that investor sentiment in the euro zone is in the doldrums. After a frighteningly contractionary value of economic expectations of -43.6 points in August and -22.4 points in September, the value fell again to -23.5 points. This corresponds to the lows of 2009 and 2011/12 and confirms that market participants expect an economic downturn. Fears are rising that individual countries of the monetary union will slide into recession.
|10:00||Italy||Industrial orders (y/y)||-1.0%|
|10:30||UK||Consumer prices (y/y)||1.7%|
|11:00||Euro area||Consumer prices (y/y)||0.9%|
|14:30||USA||Retail sales (m/m)||0.4%|
|USA||Bank of America||Q3|
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Source: LGT Bank (Switzerland) Ltd.
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