By Leon Gettler >>
GLOBAL GROWTH is expected to slow down in 2019 with the data flow from China, the US, the Eurozone and Australia, according to economist Stephen Koukoulas.
Mr Koukoulas told Talking Business that while there was no sign at this stage of a recession or hard landing, growth will be slower in 2019.
“We have got the global economy easing back a notch and the big question for economists and markets is, how slow will it get?” Mr Koukoulas said.
He said the picture in Australia was complicated with the slowdown in the housing market and the tightening of credit, leaving businesses struggling to raise money.
He said Prime Minister Scott Morrison’s election pledge to create 1.25 million jobs over the next five years was problematic.
He said the government’s budget forecasts in December had gross domestic product growing at 3.5 percent and employment growth at 1.5 percent.
“Even with those good numbers, you only have 950,000 jobs. Maybe has something up his sleeve in terms of pump priming for the economy, but it doesn’t look likely. He won’t achieve that.”
Mr Koukoulas said the Reserve Bank of Australia would have to do an about face and cut interest rates with inflation low and the economy weaker than expected.
He said gradual deceleration in China will affect the global economy, and Australia’s.
He said China was growing at the slowest rate in 28 years and China was now easing its monetary policy because of concerns it was slowing down a lot harder than first forecast.
“The thing that’s still lingering over the global economy is the Trump tariff wars,” he said.
Another issue was the political turmoil, of the shutdown in the US, Brexit, demonstrations in Paris and France and the election in Australia. All this has an impact on investors.
“It doesn’t stop businesses from investing and consumers from spending but it has this marginal impact,” Mr Koukoulas said.
“When you talk about an economy going at 2.5 or 3 percent, it doesn’t sound like much but it’s actually quite important for its implications for employment, for inflation. The softening of the economy becomes a little more acute.”
Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.