2018 In Focus: How Markets Around The Globe Performed

The year 2018 was characterized by a flat global growth according to stats combined by Cytonn Investments.

The growth in the US was weighed down by the negative effects of the trade conflicts between the US, China and Eurozone.

The growth in US was also weighed down by a weaker outlook for some key emerging markets such as China and Brazil, arising from country-specific factors such as:

(i) Country-wide industrial action in Brazil,

(ii) Political uncertainty in Britain due to the Brexit vote,

(iii) Country-wide protests in France, tighter financial conditions, and geopolitical tensions.

According to IMF, global GDP growth in 2018 is expected to come in at 3.7 percent similar to the growth registered in 2017, and higher than the 5-year average of 3.5 percent.

The IMF downgraded their expectations for global growth this year from 3.9 percent in June 2018 to 3.7 percent in October 2018, citing that the trade tensions between the U.S. and trading partners have started to hit economic activity worldwide.

In terms of trade, the World Trade Organization (WTO) downgraded their outlook for world trade growth in 2018 to 3.9 percent from their 4.4 percent expectation in April 2018, citing a rise in trade tariffs targeting a variety of exports from large economies, mainly the US, China and the Eurozone.

The uncertainty generated by the continuous trade conflicts has had the impact of reducing international trade.

Monetary policy tightening in developed economies has also contributed to volatility in exchange rates, especially in emerging markets, thereby further negatively affecting international trade.

Global equity markets registered declines during the year, as shown in the chart below, as gains made during the first 9-months of the year were wiped-out by large declines in the fourth quarter of the year.

The poor performance in the last quarter of the year was due to a slowdown in global economic growth prospects, following a persistence in trade conflict among major economies, increased geopolitical tensions and declining commodity prices, which dampened investor sentiment leading to sustained price declines.