Q4 2018Global Economic Forecasts © 2018 Euromonitor International 1introductionEuromonitor International Analytics offers precise answers to vital business questions in an increasingly fast-paced and uncertain world. Our Macro Model provides regularly updated forecasts and “what-if” scenarios for core macroeconomic variables, including gdp, growth and unemployment. Its global scope ensures our macro forecasts and scenarios reflect the economically inter-connected world in which we live. The Global Economic Forecasts report focuses on quarterly macro changes for the worlds key economies and what these mean to our view of the likely, optimistic and pessimistic scenarios for the global economy. Ultimately, we help businesses stay ahead of risks and opportunities as they emerge on a macroeconomic basis.© 2018 Euromonitor International 2Growth momentum in many of the worlds economies might have peaked in 2018 and global expansion is projected to start cooling down gradually. Global real gdp growth is forecast at 3.8% in 2018 (a pace similar to 2017), declining to 3.5% in 20192020. Forecasts for many advanced economies have been downgraded since our previous quarterly forecast following worse than expected performance so far in 2018 and rising trade tensions. Advanced economies real gdp growth is anticipated to remain strong in 2018 (at 2.3%) and decline to 1.82.0% annually in 20192020.Emerging economies outlook has been adversely affected by the worsening global trade and external financing conditions as well as lower investor confidence for countries such as Argentina and Turkey. Emerging economies gdp is estimated to grow by 5.0% in 2018 and to slow to 4.8% in 20192020.World Real GDP Growth%0123456Advanced economiesWorldEmerging markets5.02.33.82014 2015 2016 2017 2018 20192012 2013 2020 2021Source: Euromonitor International Macro ModelNote: Growth rates are based on 58 world's major economies covered by Euromonitor International Macro Model© 2018 Euromonitor International 3SCENARIO GLOBAL RISK INDEXGlobal Downturn 65Emerging Markets Slowdown 40Global Crisis 25China Hard Landing 22Eurozone Recession 20US-China All-Out Trade War 16No-Deal Brexit 14Eurozone Crisis 11Global Trade War 11Trump Adverse Policies 10Korean Conflict 9Overall global risk outlook has worsened since August. Escalating trade barriers, higher political risks, and worsening financial market conditions could further reduce growth across advanced and emerging economies alike.Note: Global Risk Index ranks scenarios by the expected gdp impact, calculated as the impact of the scenario multiplied by its probability.Scenario definitions on pages 3132GLOBAL ECONOMIC FORECASTS Q4 2018© 2018 Euromonitor International 4country highlights EUROZONE UKThe Eurozone outlook has continued to deteriorate and has lost its strong momentum from 2017. Real gdp is forecast to increase by 2.0% in 2018 and afterwards to slow to 1.8% in 2019.The UK economy picked up pace, aided by warm weather. The real gdp growth forecast has been raised to 1.4% in 2018 and 1.5% in 2019. However, the outlook is dimmed by lingering Brexit uncertainty.Better than expected performance has led to the US real gdp growth upgrade to 2.9% in 2018. However, trade tensions with China have escalated, justifying a reduction in the 2019 forecast to 2.4%.USJapan is expected to start feeling the effects of the slowing global economy and China-US trade war. For now, we have maintained gdp growth forecasts at 1.1% in 2018 and 1.0% in 2019.JAPAN2018 2018 2018gdp growth gdp growth gdp growth2019 20192.9% 2.0% 1.4%1.8% 1.5%2018gdp growth20191.1% 1.0%Source: Euromonitor International20192.4%1%3%2%4%0%GDP growth 20182020 2020 2020 20202017 2017 2017 2017GLOBAL ECONOMIC FORECASTS Q4 2018© 2018 Euromonitor International 5country highlights RUSSIA INDIAHigher oil prices had a favourable effect on the Russian economy, so did rising private consumption and net exports. We expect real gdp to grow by 1.7% in 2018 and to slow down to 1.5% in 2019.India has emerged from disruptions caused by demonetisation and GST, accelerating to a pace unseen in two years. gdp growth forecasts have been lifted to 7.7% in 2018 and 7.6% in 2019.Uneven economic recovery in Brazil and the apparent lack of tangible measures to kick-start the economy have prompted a downgrade in real gdp growth forecasts to 1.4% in 2018 and 2.2% in 2019.BRAZILChinas economy continues to slow gradually, consistent with a soft landing. However, rising trade tensions have worsened the outlook. We forecast gdp growth of 6.6% in 2018 and 6.1% in 2019.CHINA2018 2018gdp growth gdp growth gdp growth2019 20191.7% 7.7%1.5% 7.6%gdp growthSource: Euromonitor International2018 20191.4% 2.2%2018 20196.6% 6.1%2%0%4%6%8%-1%GDP growth 20182020 2020 2020 20202017 2017 2017 2017GLOBAL ECONOMIC FORECASTS Q4 2018© 2018 Euromonitor International 6gdp forecasts revisions over last quarterCOUNTRY 2017 % 2018 (F) % 2019 (F) % 2020 (F) %20212025 AVERAGE (F) %2018 FORECAST CHANGEPercentage points2019 FORECAST CHANGEPercentagepointsAdvancedUS 2.2 2.9 2.4 2.0 1.6 0.2 -0.2Canada 3.0 2.1 2.0 1.7 1.7 0.2 0.2Japan 1.7 1.1 1.0 0.6 0.7 0.0 0.0Eurozone 2.5 2.0 1.8 1.6 1.5 -0.1 0.0France 2.3 1.7 1.7 1.6 1.5 -0.2 -0.1Germany 2.5 1.8 1.6 1.6 1.1 -0.2 -0.1Italy 1.6 1.0 0.8 0.9 0.8 -0.2 -0.3Spain 3.1 2.5 2.3 1.9 1.4 -0.2 0.0UK 1.7 1.4 1.5 1.4 1.6 0.2 0.2EmergingChina 6.8 6.6 6.1 5.9 5.3 0.1 -0.2India 6.3 7.7 7.6 7.5 7.0 0.3 0.1Brazil 1.1 1.4 2.2 2.4 2.4 -0.5 -0.3Mexico 2.3 2.2 2.3 2.4 2.8 0.0 0.0Russia 1.5 1.7 1.5 1.5 1.5 0.2 -0.2GLOBAL ECONOMIC FORECASTS Q4 2018© 2018 Euromonitor International 7inflation forecasts revisions over last quarterCOUNTRY 2017 % 2018 (F) % 2019 (F) % 2020 (F) %20212025 AVERAGE (F) %2018 FORECAST CHANGEPercentage points2019 FORECAST CHANGEPercentagepointsAdvancedUS 2.1 2.6 2.4 2.1 2.0 0.0 0.0Canada 1.6 2.4 2.3 2.0 2.0 0.0 0.1Japan 0.5 1.0 1.2 1.6 1.3 0.0 0.0Eurozone 1.5 1.7 1.7 1.7 1.9 0.1 0.0France 1.1 2.0 1.7 1.7 1.8 0.2 0.1Germany 1.8 1.9 1.8 1.8 2.0 0.0 0.0Italy 1.2 1.3 1.4 1.5 1.7 0.2 0.1Spain 2.0 1.8 1.8 1.8 2.0 0.0 0.0UK 2.7 2.5 2.3 2.1 2.0 -0.1 -0.1EmergingChina 1.6 2.1 2.5 2.5 2.5 0.0 0.1India 3.3 4.8 4.9 4.8 4.8 -0.2 0.0Brazil 3.5 3.6 4.1 4.0 4.0 0.3 0.2Mexico 6.0 4.7 4.0 3.5 3.2 0.0 0.0Russia 3.7 2.8 4.6 4.2 4.0 0.2 0.4GLOBAL ECONOMIC FORECASTS Q4 2018© 2018 Euromonitor International 8interest rate forecastAdvanced Economies Interest Rate Forecast%2015 2016 2017 2018 2019 2020 2021USEurozone0.01.9-101234%2015 2016 2017 2018 2019 2020 2021UKJapan0.00.6-0.500.511.52BRIC Countries Interest Rate Forecast%2015 2016 2017 2018 2019 2020 2021IndiaChina01234567894.46.4%2015 2016 2017 2018 2019 2020 2021024681012141618BrazilRussia6.57.3Source: Euromonitor International Macro ModelSource: Euromonitor International Macro Model© 2018 Euromonitor International 9GLOBAL ECONOMIC FORECASTS Q4 2018maJ.smcpor forecast revisionsBrazilWe have downgraded the gdp growth forecast to 1.4% in 2018 and 2.2% in 2019 due to weaker than expected q3 2018 data and tighter monetary policy. Private sector confidence declined further before the presidential election, industrial production dropped in September and inflation has increased. This puts further pressure on the central bank to raise interest rates. While the new government of Jair Bolsonaro is likely to implement more private sector and investor friendly policies, it faces significant barriers to legislation due to a divided Congress.