Economic growth is key for the financial market outlook, and we expect growth to slow materially as the post-crisis recovery enters its late stage. The slowdown is likely to be led by the U.S. but we see it partly cushioned by more steady growth in Europe and emerging markets (EMs) , notably China. We expect the Chinese economy to regain its footing in the first half of 2019, thanks to stimulus measures already in place and others expected to come, as we write in our latest Macro and market perspectives piece, Slowing - but still growing . China's policymakers are seeking to boost the economy through a range of channels, including tax cuts, injecting fresh liquidity via cuts to bank reserve requirements while relaxing macro-prudential measures aimed at limiting financial leverage. A more gradual downtrend in China's gross domestic product ( GDP ) growth-rather than a sharp slowdown-should underpin growth in other EMs. The IMF projects that China will account for about a third of global growth in 2019, compared to roughly one tenth from the U.S. This shift would follow a surprisingly sharp local slowdown in late 2018. Soft economic data from China-such as business surveys-painted a healthy picture in late 2018, while hard data-such as industrial production and retail sales-pointed to worrying weakness. Incoming data have generally disappointed market expectations. Growth has slowed for two main reasons, in our view: policy-led constraints to clamp down on excessive credit expansion implemented in the past and much greater uncertainty arising from the U.S.-China trade dispute, especially for China's key industrial sector. [storytout] Find more macro insights in our Macro and market perspectives . [/storytout]
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