Economic and Financial Outlook - November 18

The Global Economy Continues to Expand in Spite of Numerous Tensions

Concerns regarding the strength of the global economy recently had a negative impact on financial markets. Nevertheless, global real GDP growth is expected to reach 3.7% in 2019, and then 3.4% in 2020. The Chinese economy continues to slow down, as trade tensions with the United States persist.
The political tensions in the euro zone are highlighting the economic difficulties of some countries. The outcome of Brexit remains unclear and hurts the British economy, which is going through a period of weak growth.
The economic outlook in the United States remains favourable. Despite the harmful consequences of protectionism, real GDP is expected to grow 2.7% in 2019, before slowing to 2.0% in 2020. A December monetary tightening is still expected in the United States, followed by three additional key rate hikes in 2019. Bond yields should therefore resume an upward trend in the near future.
The challenges faced by the energy sector are restraining economic growth in the short term in Canada, but the labour market is in very good shape. The elimination of the uncertainty concerning trade relations with the United States should encourage investment and exports. The next key rate hike will not be ordered before the spring of 2019.
Quebec’s economy grew more than 2.5% in 2018, but will slow to roughly 2.0% in 2019 and 1.5% in 2020. The contribution of households will lessen as a result of the cumulative key interest rate hikes applied since mid-2017.

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