The value of investments and any income from them can fall and you may get back less than you invested.

The big economic questions for the rest of 2019

The big economic questions for the rest of 2019


The first three quarters of 2019 were turbulent for the global economy.

As we start to consider the prospects for 2020, we take a look at the factors that will drive the economy for the rest of the year.

1. Trade wars

As Spring turned to Summer, there was hope that the China-US trade war was nearing an end. But that optimism is now long gone. Donald Trump has said he is “in no hurry” to conclude a deal. Nor has China showed an urge to compromise.

The question many investors are now asking is whether Trump’s trade war could spread, accelerating a slowdown in global growth that is already apparent.

The US president has already indicated his inclination to impose tariffs on French wine in response to France’s new digital services tax[1].

The US is also threatening to impose duties on billions of dollars’ worth of European exports in a long-running dispute over European government support for Airbus[2]. Europe has warned that if US tariffs are imposed it will respond in kind, in a standoff that has shown little sign of resolving itself.

2. Central Bank policy

As global growth has slowed, major central banks have indicated they are ready and willing to act to keep the motors of their economies running.

In July the Federal Reserve (Fed) took the lead by cutting interest rates. Markets are expecting another US rate reduction before the end of the year.

The European Central Bank (ECB) has also raised the possibility that rates could be cut, alongside other stimulus measures. The only question is whether this will happen before or after 1 November, when Christine Lagarde will replace Mario Draghi as President of the ECB.

Faced with a new prime minister, chancellor and continued Brexit uncertainty, the Bank of England (BoE) has become something of an outlier among big central banks. Rather than preparing for fresh stimulus or interest rate cuts, the BoE has adopted a “wait and see” approach.

3. Deal or no deal Brexit 

Sterling slumped in July as investors grew increasingly anxious about Boris Johnson’s vow to pull the UK out of the EU by the end of October with or without a deal.

At the time of writing it is difficult to anticipate where the parties will be when this magazine reaches readers. It would appear at the very least likely that the ongoing volatility in sterling’s value will continue as markets react to each new clue as to the final shape of Brexit.

4. US election countdown 

In the next few months it will be difficult to avoid the build up to the next US presidential vote, even though the November 2020 election is still hundreds of days away. The first Democratic primary debates (where the Democratic Party’s candidates vie for the presidential nomination) took place in the Summer; President Trump has also launched his own re-election campaign.

The interesting thing for investors is how this will playout in terms of trade. We have mentioned the US-China trade dispute above and indicated that there are few signs of it ending soon. Trump has suggested that China may not want to clinch a deal until it knows the outcome of the 2020 presidential election. That means we could be in for the very long haul.

Other elections to watch out for this year include the Argentinian general election on 27 October and the Austrian legislative election on 29 September. Canadian voters go to the polls on 21 October, while Hong Kong, which has been rocked by anti-government protests, holds local elections on 24 November.

5. Digital disruption 

The FAANG stocks – Facebook, Amazon, Apple, Netflix and Google – have been a major factor propelling America’s S&P500 index upwards in recent years. But the tech giants are under increasing regulatory scrutiny due to their size and market power.

Over the summer, Facebook revealed it is facing an anti-competitive investigation by US federal regulators[3]. The Silicon Valley staple also admitted that regulatory issues may prevent the launch of its Libra global cryptocurrency[4]. The US Department of Justice announced a broad antitrust investigation into the leading online platforms[5]. Meanwhile, the European Union has launched a formal investigation into Amazon and whether its business practices break EU antitrust rules[6].

Alert investors will be watching out for any more regulatory developments in the coming months.



1 Reuters: France urges Trump: ‘Don’t mix digital taxes and wine tariffs’, 27 July 2019.

2 Bloomberg: Europe Braces for $7 Billion US Tariff Hit Over Airbus Dispute, 15 July 2019. Reuters: Facebook warns of costly privacy changes, discloses another US probe, 24 July 2019.

3 Coindesk: Facebook Libra Might Never Launch, Company Concedes in SEC Disclosure, 30 July 2019.

4 Financial Times: Department of Justice opens review into Big Tech’s market power, 25 July 2019.

5 The Guardian: Amazon faces EU inquiry over treatment of small retailers, 17 July 2019.

6 The Guardian: Amazon faces EU inquiry over treatment of small retailers, 17 July 2019.

The value of investments and any income from them can fall and you may get back less than you invested. Past performance is not a guide to future performance.

The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

No investment is suitable in all cases and if you have any doubts as to an investment’s suitability then you should contact us.

If you invest in currencies other than your own, fluctuations in currency value will mean that the value of your investment will move independently of the underlying asset.

The opinions expressed in this document are not necessarily the views held throughout Brewin Dolphin Ltd.