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2018 Annual Report


2018 Annual Report

Continental Corporation - 2018 Annual Report

Forecast of Macroeconomic Development

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In its January 2019 World Economic Outlook Update, the International Monetary Fund (IMF) predicts that growth in Germany and the eurozone will slow slightly again in the current fiscal year due to subdued consumer spending, flagging growth in private investment and weaker foreign demand. For 2019, the IMF is now projecting that the gross domestic product (GDP) of Germany and the eurozone will grow by 1.3% and 1.6% respectively.

For the U.S.A., the IMF expects a decline in GDP growth to 2.5% this year. Above all, economic activity could be curbed by further interestrate hikes by the U.S. Federal Reserve (Fed). The IMF also expects the effects from the U.S. fiscal policy to decrease. As a result of the increase in the exchange rate of the U.S. dollar to many currencies, the trade deficit is also likely to increase due to rising imports.

For Japan, the IMF is forecasting growth of 1.1% in 2019. The IMF anticipates an expansion of fiscal policy measures here to mitigate the effects of the rise in consumption tax planned for October 2019. Low interest rates, which are boosting private investment, continue to have a positive effect. However, the fact that the exchange rate of the Japanese yen to many other currencies has recently increased means that the contribution of Japanese foreign trade in 2019 could be lower than in 2018.

According to the IMF, emerging and developing economies are expected to record a 4.5% increase in GDP in 2019. The main reason for the lower level of growth in comparison to 2018 has to do with China, for which the IMF anticipates a slowdown in growth to 6.2% as a result of the continuing trade conflict with the U.S.A. The IMF also anticipates somewhat lower growth of 1.6% for Russia. By contrast, it is once again forecasting strong growth of 7.5% for India. For Brazil, the IMF expects a slight increase in growth to 2.5%.

Based on its estimates for the individual countries and regions, the IMF expects global economic growth to fall by 0.2 percentage points year-on-year to 3.5% in 2019. The IMF cites an escalation of the various trade conflicts as a key source of risk to its outlook. Given the high levels of public and private debt, general risk sentiment and financial conditions could also deteriorate further. The potential triggers mentioned by the IMF include a “no-deal” withdrawal of the United Kingdom from the European Union and a greater-than-envisaged slowdown in China.

Year-on-year economic growth (GDP) in 2019

Year-on-year economic growth (GDP) in 2019
Sources: IMF – World Economic Outlook Update January 2019, Eurostat, statistical offices of the respective countries, Bloomberg.