• Economic upswing has peaked after prolonged recovery phase
  • Slightly lower growth rates, but persistently solid conditions in 2019
  • Unemployment continues to fall in Eurozone, stabilization of GDP growth in Austria
  • Since 1970: 83% of all economic downturns originated in USA

VIENNA, Austria - January 16, 2019 –  The year 2018 was characterized by difficult conditions on the capital markets. However, the current economic outlook is not as pessimistic as the reaction on the markets would suggest. “Currently, there are no signs of a pronounced slump in growth or even an economic crisis. An escalation of the trade dispute between the USA and China poses the biggest risk to the economy,” said Ingo Jungwirth, an economist at BAWAG P.S.K.

2019: Economic upswing has peaked

For investors, 2018 proved to be the most difficult year on the financial markets in a decade. Most asset classes posted losses triggered by negative trends in the second half of 2018. Only safe havens such as high-quality government bonds (e.g. Austria and Germany) and real estate delivered gains.

A look at the current economic conditions shows that while US leading indicators for 2019 are signaling slightly lower momentum than in the boom year of 2018, there are no signs of a pronounced slump in growth. The economic cycle in the USA has peaked, so lower growth is expected in 2019. However, economic conditions will remain solid, with growth of around 2.0%. In the Eurozone, forecasts for 2019 as a whole point to GDP growth of roughly 1.5% and a decline in unemployment to less than 8.0%.

Positive economic activity despite warning signs

Along with a multitude of political risks, worries of a global economic downturn clouded the sentiment on the financial markets during the second half of 2018. Although the yield curve, volatility indices, and leading indicators in the USA are issuing warning signs, they should be taken with a grain of salt because they generally have a lead time of at least 12 months. So what does this mean for the current situation? An analysis of capacity utilization in industry shows that 2018 was the second year of the global economic boom. In the past, these kinds of boom phases have typically lasted four years before being followed by a downturn. “An abrupt drop-off in growth in 2019 would be unusual from a historical perspective, especially because economic growth was below average for years following the last global financial crises in 2008/09,” explained Jungwirth. When global economic downturns have occurred in the past, they have originated in the USA in 24 of 29 cases since 1970. This has generally been followed by a slump in Europe with a delay of two to three quarters on average. “There are currently no signs of a recession in the USA,” said Jungwirth.

Political factors pose biggest risks to economy

According to Jungwirth, an escalation of the trade dispute between the USA and China is the biggest risk for the economy. A hard Brexit or the concerns about Italy’s government finances are rather unlikely to trigger a global economic downturn. With regard to interest rate forecasts, the US Fed is expected to introduce two rate hikes in 2019, while the end of the ECB’s zero-rate policy is not anticipated until the end of 2019 at the earliest.


This publication is intended to provide non-binding information. It is not a financial analysis and does not constitute an offer or solicitation to buy or sell investment products or other specific products. Although the information and opinions contained in this publication are based on reliable sources, BAWAG P.S.K. shall not accept contractual or implied liability for incorrect or incomplete information. All information and figures provided are subject to change without prior notice. Forecasts regarding future developments are based purely on estimates and assumptions. The actual future developments may deviate from the forecast. Therefore, forecasts are not a reliable indicator of the future performance and development of a financial instrument, financial index, or securities service.


Manfred Rapolter (Head of Communications, Spokesperson)
Tel: +43 (0) 5 99 05-31210

Henriette Mußnig
(Press Officer) 
Tel: +43 (0) 5 99 05-32086

Doris Unterrainer
(Communications Specialist)
Tel: +43 (0) 5 99 05-32084

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