Page 11 - Economic report 2018

The external environment of

the Andorran economy

I. The international economy

1. The main features of economic development in 2018

In 2018, the global economy saw a 3.6% The global economy is slowing
increase in GDP, according to the International because global trade growth is
Monetary Fund (IMF), two tenths less than in
2017, the year in which it reached the highest slower than in 2017.
level since 2011. The slowdown in global growth
was encouraged by trade tensions between the USA and China and weakening activity in
some European and emerging economies. This occurred within the context of a slowdown
in world trade and high political uncertainty, provoking a generalised fall in stock markets. In
contrast, there were other factors that encouraged growth, such as the expansionary monetary
policies of the major central banks, falling commodity prices and, in the case of the Eurozone,
depreciation of the euro against the dollar.

Lower growth in global demand and existing risks had a negative impact on both developed 9
economies, which went from global growth of 2.4% in 2017 to 2.2% in 2018, and emerging
and developing economies, which grew at a rate of 4.5% in 2018, three tenths less than in
the previous year. This trend contrasts with that of the previous year, when improvements in
growth were synchronised in both advanced and emerging economies.

The Chinese economy slows to its GLOBAL GDP GROWTH
lowest rate in three decades. Annual variation rates at constant prices, in % Chart 1.1

In the developing and emerging economies,
among the factors that limited growth were
global trade tensions; hardening credit policies
in China and the deteriorating macroeconomic
situation in Argentina, Venezuela and Turkey,
along with depreciation of their currencies
against the dollar. In contrast, oil-exporting
countries benefited from rising oil prices. The external environment of the Andorran economy | I. The international economy

Among the Asian emerging economies, Emerging and developing Advanced economies
markets
China grew 6.6% in 2018, the lowest rate f: IMF forecasts (July 2019).
in almost three decades. This slowdown is
due to falling investment, resulting from the Source: IMF.
lending restrictions with which the Chinese
government is trying to encourage sustainable growth. In parallel, vehicles sales fell as
purchasing incentive programmes ended and tariff measures were imposed by the US. For
2019, the Chinese government has lowered its economic growth target to between 6% and
6.5%, and announced a package of measures to promote growth. For its part, India continued