General economic conditions

Development in the global economy remained positive in fiscal year 2018/19, if somewhat subdued compared to the previous year. In its October forecast, the International Monetary Fund (IMF, www.imf.org) expects an increase of 3.0 % (previous year: 3.6 %). The lower growth has largely been attributed to the sustained trade conflict between the US and China, a conflict which, from a macroeconomic perspective, remains one of the dominant themes of fiscal year 2018/19. Added to this, Brexit discussions and various other geopolitical tensions have led to greater uncertainty.

For the eurozone, the IMF forecasts a growth rate of 1.2 % (previous year: 1.9 %). Having played a driving role in this trend last year, Germany can expect its economic momentum to slow to a comparatively low 0.5 % (previous year: 1.5 %) in 2019. The IMF identifies cautious foreign demand, decreased stock due to weaker industrial output, and regional factors such as falling sales figures for the automobile industry in Germany, uncertainties relating to Brexit in the UK, and weaker domestic demand in Italy as the primary causes of weaker growth in Europe.

For the US, the IMF is predicting economic growth of 2.4 % for 2019 (previous year: 2.9 %). The main drivers of this stable growth continue to be current fiscal policy, as well as low unemployment figures and promising levels of domestic consumption. It views the course of the US government, particularly in light of the current state of bilateral relations with China, as posing a potential risk to the US economy.

The Chinese economy is expected to follow a course of continued growth with considerable momentum in 2019. At a predicted 6.1 %, however, progress is unlikely to match that of the previous year (6.6 %). Once again, the effects of the economic conflict and of weakened foreign demand are being felt clearly here.

Global finance markets were largely favorable in 2019. In the US, the Federal Reserve decreased the federal funds rate in July, September, and October, resulting in a rate of between 1.50 and 1.75 % on October 31, 2019. In Europe meanwhile, the European Central Bank has maintained its zero interest rate policy.