VKF_FRAE_2018_uyg11

28 Section I: Introduction In 2018, the global economy gave signs of slowing down. The world economy expanded 3.8% in 2017. Although growth came at 3.7% is expected for 2018, downside risks included the economic slowdown in China, protectionist trade policies, political uncertainties and Brexit-related worries. In 2019, the global economy is forecast to expand 3.5%. Protectionist policies, trade-related tensions and political uncertainties posed risks to global economic growth in 2018. Trade wars between the USA and China topped the agenda in 2018. The trade spat between the two countries began in March when Trump imposed customs duties on imported steel and aluminum. Subsequently, tensions mounted as the two sides increased trade tariffs mutually. Finally, during the G-20 Leader Summit on November 30 – December 1, US President Donald Trump and Chinese President Xi Jinping agreed that no new customs duties should be introduced between the two countries for 90 days. Furthermore, the US and China would have to hold 90 days of negotiations to reach a deal, which was viewed as a favorable development. However, in consideration of the previous tensions between the United States and China, the markets approached the latest developments with caution. The European Union (EU) was also adversely affected by protectionist policies and trade wars. Especially in the second half of the year, slowing economic growth and aggravating political problems posed risks for the EU. The Yellow Vest Protests that commenced in November against French President Emmanuel Macron, one of the staunchest defenders of the EU, in reaction to rising oil prices and worsening economic conditions led to political instability. In the last months of 2018, concerns about Italy’s budget for 2019 emerged as another major risk factor for the European Union. Italy’s Budget Deficit/GDP target of 2.4% for 2019 was rejected by the EU Commission. Compromise was reached when Italy, which has a heavy public debt burden, revised its Budget Deficit/GDP target to 2.04%. Global Economy THE WORLD AND TURKEY IN 2018 Protectionist policies, trade-related tensions and political uncertainties posed risks to global economic growth in 2018. Source: IMF * 2018 estimated numbers. Developing Countries Developed Countries World Real Growth (y-y, %) 10 6 8 0 -4 -2 2 4 -6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* VakıfBank is on your side with accurate analyses of global and domestic economic developments...