The world economy has slowed as evidence of both Germany and Japan showing contraction in the most recent quarters. If they have two quarters in a row that is the definition of a recession. The IMF (International Monetary Fund) economists have ratcheted down world growth for 2019 to 3.5% from 3.7%. The problem is less so in the two huge economies in the world the U.S. at $20 trillion and China at $14 trillion. The next largest economies are Germany, United Kingdom and Japan and Germany’s economy is $4.2 trillion. So you can understand why the two largest economies have such a large sway in world economics.
For 2019 the projections are both the U.S. and China will grow their economies but at a slower pace. Recently, China’s projection came in at the low 6% growth range and the U.S. in the low 2%. Though neither is expected to fall into recession, the slowdown will have a significant impact on smaller economies and the fear is that their slowdown will have a negative feedback effect.
The only real conclusion one can make is that the world is slowing down economically and stock markets have been reflecting that slowdown in 2018. This slowing in economic activity is likely going to produce more volatility for stock prices worldwide in 2019.