The global economy took a knock during the second quarter of 2019, recent data has shown, affected by geopolitical events such as the US-China trade dispute and the UK’s upcoming Brexit deadline. Amid heightened fears of a global recession, policymakers have reacted, with the US Federal Reserve (Fed) cutting interest rates for the first time in over ten years.
Most major economies saw weaker growth in the second quarter, gross domestic product (GDP) statistics reveal. China’s GDP grew at an annualised rate of 6.2%, the weakest growth the country has seen since records began in 1992. Meanwhile, the annualised growth rate of 2.1% in the US was significantly lower than the 3.1% recorded in the first quarter.
THE US REACTS
The Fed cut its benchmark interest rate by a quarter of a percentage point on 31 July, also indicating its willingness to provide additional support should the global economy decline further. US borrowing costs were last cut in 2008. The figures show a decline in global growth over the past months, with many countries facing an uncertain future. The US-China trade wranglings continue to hamper growth opportunities.
Many investors are getting used to a variety of political, financial and economic factors and learning to look through the ‘noise’ to focus on what really matters. Portfolio diversity holds the key to approaching your investments and managing risk. It is important to think about longer-term timescales instead of focusing too intently on short-term events and market fluctuations. Financial advice is essential to help position your portfolio in line with your objectives and attitude to risk.
The value of investments and income from them may go down. You may not get back the original amount invested.