Weakness focused in the euro-zone and Asia

World GDP growth held up well in Q4, but there is clear evidence in surveys and other timely indicators that the global economy took a turn for the worse at the start of 2019. The weakness has been most acute in the euro-zone, where industrial production contracted at its fastest pace since the financial crisis in December and the PMIs have fallen dangerously close to recession territory. The Chinese manufacturing PMI has also dropped and the slump in Chinese imports towards the end of last year was a worrying sign that underlying demand there has weakened a lot. The US is a relative bright spot amid this gloom. Available hard data still paint a pretty positive picture of the US economy and business surveys including the manufacturing PMI have held up far better than those elsewhere. On balance, though, we still expect US GDP growth to slow later this year as the boost from previous policy stimulus fades.