Merrill Lynch forecasts slowing global growth in 2019

In this Jan. 25, 2009 file photo, a Bank of America branch office is shown in New York. A federal judge said Monday, Feb. 22, 2010, he would reluctantly approve an amended $150 million settlement between the Securities and Exchange Commission and Bank of America to end civil charges accusing the bank of misleading shareholders when it acquired Merrill Lynch. [Photo: AP]

Global growth is expected to dip from 3.8 percent in 2018 to 3.6 percent in the year ahead amid potential risks, according to a report issued on Thursday by BofA Merrill Lynch Global Research.

"We're expecting slightly weaker global growth. Both developed and emerging markets with most of the major economies are seeing weaker rather than stronger growth in 2019," said its research team.

The developed markets are expected to see a growth of 2 percent in 2019 as compared with a 2.2 percent gain in 2018; the growth prospect for the emerging markets is 4.6 percent in the year ahead, down from a 4.8-percent rise this year, according to the report themed Global Economics 2019 Year Ahead Outlook.

As for the major economies, the researchers expect the U.S. economy grow by 2.7 percent in 2019 and 1.9 percent in 2020, down from an estimated 2.9-percent growth in 2018, as fiscal stimulus may fade in the second half of 2019, revealing an economy growing near potential.

Meanwhile, the euro area is expected to see a 1.4 percent growth next year after a 1.9 percent advance this year.

A less friendly policy environment suggests a significant slowing in growth globally and risks including uncertainties caused by lingering global trade tensions and Brexit are skewed to the downside, according to analysts.

Meanwhile, structural issues in euro area, rising U.S. budget deficits, worries about consumption tax hike in Japan are potential longer-term risks for global economy.

However, the researchers noted that the slowing growth is likely a benign slowdown, instead of a "recession."

"Global fiscal policy has shifted from stimulative to neutral, but monetary policy is still supportive of growth. We expect a relatively benign outcome for most of the risks currently undercutting market sentiment," said the research team.