2019/20 Budget Communication Final Budget Communication | Page 28

In the United States, the growth of real output is projected at 2.3 percent for 2019, but
expected to taper to 1.9 percent in the following year, partly reflecting a waning in the impact of
the sizeable fiscal stimulus into 2020, the effects of the Government shutdown, and lower fiscal
spending. Similarly, economic growth in the euro area is anticipated to come in at 1.3 percent in
2019 before edging up marginally to 1.5 percent in 2020, as some of the weakening factors in
Germany, Italy, and France begin to dissipate. As for the U.K., output is projected to grow by 1.2
percent in 2019 and 1.4 percent in the subsequent year, as the prolonged uncertainty surrounding
Brexit continues to exert a drag on economic potential. In Japan, real GDP growth is forecasted at
1.0 percent in 2019, before decreasing to 0.5 percent in 2020, while growth in China is projected
to slow to 6.3 percent in 2019 and 2020, reflecting weaker underlying growth in 2018 and lingering
trade tensions with the U.S.
Over the medium term, growth trends are estimated to remain benign, with world
output rising marginally to 3.7 percent. Economic activity in emerging and developing markets is
forecasted to grow by 4.9 percent, backed by strong investment growth, which is anticipated to
trigger higher capital spending and broader policy actions geared toward easing uncertainty.
However, growth in advanced economies is expected to decline slightly to 1.6 percent over the
medium term, due to continued weak productivity growth and lethargic labor force expansion.
All told, a myriad of political and economic factors have underpinned a slowdown in
global expansion, particularly in the advanced economies. Prospects for the near term point to
some strengthening between 2019 and 2020; however, there is likely to be some stabilizing over
the medium horizon, notwithstanding any adverse occurrences. While these developments present
some opportunities for growth in The Bahamas, the slowing pace of the U.S. economy—our largest
trading partner—offers definite challenges, particularly as it relates to tourism performance.
Thus, it is imperative that we create and incubate avenues for stronger economic
activity by encouraging higher productivity within the domestic economy, so as to ensure it can
withstand periods of lethargic global growth. This will be especially important to meeting the
objectives of fiscal reform, and essential to securing a more buoyant economy and enhanced job
creation.
27