The global economy is experiencing steady growth heading into the second half of the year, but gathering storm clouds could dim prospects. The increasingly belligerent trade stance of the United States could trigger a damaging trade war. Higher oil prices could erode growth. Rising political risks in Europe, especially in Italy and Spain, could hurt growth prospects. Finally, increasing financial pressure on key emerging markets, including Argentina, Brazil, South Africa and Turkey, is darkening the outlook.

In a rising market characterized by declining stocks and low availability of spare capacity, the ability of the oil market to absorb any unexpected disruptions in supply (or demand for that matter) is limited, and therefore concerns about the future availability of oil supplies put significant upward pressure on oil prices.

Eurozone real GDP growth is expected to slow to 2.1 per cent this year and 1.7 per cent in 2019 from 2.6 per cent in 2017. UK growth has been revised down to only 1.1 per cent this year and 1.2 per cent in 2019. While the momentum for emerging markets like Argentina, Turkey, Brazil and South Africa remain strong, stiff headwinds of rising US interest rates and a strengthening dollar are triggering an outflow of capital from some emerging markets and forcing their central banks to raise interest rates.