1. Overview
During the final three months of 2019 the global economy continued a slow but steady expansion. The United States, the euroarea and several emerging markets posted modest gains, while trade tensions and geopolitical uncertainty kept confidence fragile. This page reviews the most relevant macroeconomic indicators for Q42019, highlights the drivers behind them and provides a brief outlook for 2020.
2. Labour Market
2.1 United States
The U.S. nonfarm payrolls rose by 159,000 in December, bringing the unemployment rate to 3.5% its lowest level since 1969. Wage growth accelerated to 3.2% yearoveryear, indicating tightening labour conditions.
2.2 Euroarea
Euroarea employment rose by 0.3% in Q4, with unemployment falling to 7.1% in December, the lowest figure recorded since 2008. However, youth unemployment remained high at 14.2%.
2.3 Emerging markets
China added 1.1% jobs in Q4, while Indias formal sector employment grew 0.5%. Brazil and South Africa both saw marginal job creation, offset by seasonal hiring spikes in the services sector.
Source: International Labour Organization, national statistical agencies.
3. Inflation and Prices
Global inflation slowed considerably in the last quarter of 2019. The combination of falling oil prices, subdued consumer demand and stronger currencies in several regions kept price pressures low.
| Region | Annual CPI Change (Dec2019) | Core CPI | Key Drivers |
|---|---|---|---|
| United States | 1.9% | 2.1% | Lower energy prices, modest wage growth |
| Euroarea | 1.4% | 1.8% | Weak oil, stable food prices |
| China | 2.9% | 2.4% | Food price volatility, industrial output |
| Japan | 0.7% | 0.9% | Persistent deflationary pressure |
Source: IMF World Economic Outlook, August2019; national statistical offices.
4. Economic Growth
4.1 Global GDP
World GDP grew 2.9% in 2019, with Q4 contributing 0.6% annualised growth. The United States added 2.3% annualised, the euroarea 1.4%, and China 6.1%.
4.2 Sectoral performance
- Manufacturing: US manufacturing PMI fell to 47.3, indicating contraction; Euroarea manufacturing remained near 48.0, reflecting weak demand.
- Services: Global services PMI held above 50, buoyed by digital commerce and healthcare spending.
- Construction: Activity slowed in the United States and Europe but rose in India and Southeast Asia.
Source: World Bank, OECD, national central banks.
5. Outlook for 2020
While the Q42019 data painted a picture of moderate expansion, several risk factors threatened to derail the momentum:
- Trade tensions: Ongoing USChina tariff disputes could reduce export volumes and dampen business investment.
- Monetary policy: The Federal Reserves rate hikes in 2019 raised financing costs; European Central Bank kept policy accommodative, creating divergent conditions.
- Geopolitical shocks: Brexit negotiations and MiddleEast instability added uncertainty to market sentiment.
Most forecasters expected global growth to slow to around 2.5% in 2020, with the United States growing 2.1% and the euroarea 1.1%. Emerging markets were projected to average 4.5%, led by China and India.
Key policy recommendations to sustain economic wellbeing include:
- Strengthening trade diversification to mitigate tariff impacts.
- Maintaining fiscal buffers to support a countercyclical response if growth stalls.
- Investing in digital infrastructure and green technologies to drive productivity gains.
