GROUPAMA / 2018 Registration document

6 EARNINGS AND FINANCIAL POSITION MANAGEMENT REPORT OF THE BOARD OF DIRECTORS

MANAGEMENT REPORT OF THE BOARD

6.1

OF DIRECTORS

6.1.1

ENVIRONMENT

slowdown in its growth around +6.5% throughmonetary and fiscal stimulus measures. The impact of the trade war with the United States has not yet been clearly reflected in export figures. On the other hand, there was a deterioration in activity prospects through manufacturingindustry business confidencesurveys. During the year, emerging countries with the weakest fundamentals suffered from rising risk aversion. For example, Turkey saw a sharp tightening of its monetary conditions through the depreciation of its currency and the rise in its interest rates. However, Eastern European countries with healthier fundamentals ultimately suffered little from the renewed volatility and showed robust GDP growth rates this year. Financial markets in 2018 6.1.1.2 Risky assets were heavily affected by fears of a trade war, increased uncertainties about global growth, and lower liquidity in financial markets, which led to a significant increase involatility. Changes in equity markets (a) Until September, equity markets were supported by favourable economic conditions, strong growth in corporate profits, particularly in the United States, and rising oil prices. In this high valuation environment, corporate communications during the 3 rd  quarter publications led to a normalisation of medium-term earnings growth prospects, particularly in sectors at the heart of international value chains, such as automotive, which are affected by the rise in protectionism.

Macroeconomic environment 6.1.1.1 Over 2018, global growth remained steady overall while showing initial signs of slowing down towards the end of the year, particularly through business confidence surveys. In addition, certain political risks in Europe and the United States materialised, and free trade was called into question. Both factors affected the business climate. In the eurozone, gross domestic product (GDP) growth was solid at +1.9% on an annual basis. The labour market remained good, with the unemploymentrate falling by almost 1 point over the year to 8%. Underlying inflation (excluding volatile components of food and energy) stagnated at around 1%. Similarly, growth slowed gradually with a growth outlook for 2019 of +1.6%. Added to this was a tense political climate with, particularly with significant uncertainties about the outcome of the negotiations for the UK’s exit fromthe EuropeanUnion (EU). As anticipated in 2017, the European Central Bank (ECB) terminated its asset buyback programme in December and will subsequently limit itself to reinvesting bond maturities for an indefinite period. Given the fragile growth environment, the ECB nevertheless communicatedabout a very slow normalisationof its monetary policy with a central scenario of a first policy rate hike in the secondhalf of 2019. Emerging economies remain the primary engine of global growth but are vulnerable to increased volatility in financial markets and rising protectionism. China succeeded in managing the gradual

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-4

-8

-12

-16

-20

Jan. 2018

Apr. 2018

Jul. 2018

Oct. 2018

Jan. 2019

S&P 500

TOPIX

Europe Stoxx 600

MSCI Emerging Markets

Performancesexcluding dividends in local currencies

152

REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES