Global Outlook 2019

managing a “no recession, yet tricky” scenario.

managing a “no recession, yet tricky” scenario.

managing a “no recession, yet tricky” scenario.

In this year’s outlook, we share our views on a number of macro themes which we think will be highly relevant in 2019 and their likely cross-asset implications.

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has the US peaked?

has the US peaked?

It is clear that the fiscal stimulus had a big impact on US growth and was responsible for the economic outperformance in 2018, but this positive boost to the economy is now expected to fade gradually in 2019.

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trade wars and emerging markets.

trade wars and emerging markets.

Understanding the drivers of the current trade war remains key to understanding current and future asset market developments, especially in emerging markets (EM).

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temporary yet concrete truce - we continue to expect EM outperformance.

temporary yet concrete truce - we continue to expect EM outperformance.

We continue to expect EM outperformance. President Trump and President Xi declared a temporary trade truce at the 2018 G20 summit in Buenos Aires, which ran from 30 November to 1 December, in line with our out-of-consensus views.

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China’s policy stimulus.

China’s policy stimulus.

We think the consensus forecast for Chinese growth in 2019 is too bearish. It has been pricing a lot of negativity which we think will be offset to a certain extent by the policy moves undertaken by China. 

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Europe remains exposed to political risks.

Europe remains exposed to political risks.

When it comes to growth outcomes in Europe, we expect trend growth dynamics and see the recent slowdown especially in Germany as temporary. Beyond cyclical factors, political risks in
Europe, however, are likely to remain elevated going into 2019.

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global inflation overshoot remains a key risk.

global inflation overshoot remains a key risk.

Global inflation dynamics overshooting is a key risk to our central scenario of a “no recession, yet tricky” year in 2019 as central banks are likely to move into unified hiking mode across the globe and the liquidity pumped into the system post-financial crisis begins to gradually unwind.

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inequality, populism and central bank independence.

inequality, populism and central bank independence.

Populism, fuelled by rising inequality, is on the rise and continues to shape political outcomes in key economies. There is an argument that the policy actions taken by central banks in the aftermath of global financial crisis have been a strong contributor to widening the gap between the ‘haves’ and the ‘have-nots’ as rising asset prices is a key channel through which monetary policy works. 

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rising global leverage implies lower resilience to shocks.

rising global leverage implies lower resilience to shocks.

The rise in global leverage we have witnessed since 2008/2009 leaves the global economic system much less resilient to any income or interest rate shocks. Since the end of the financial crisis, the world has seen a dramatic increase in the amount of leverage in the non-financial sector.

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investing in a changing world.

investing in a changing world.

Our central scenario of a “No Recession Yet Tricky” year is likely to deliver positive macro support for risky assets, but we are also likely to see more volatility along the way.

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webinar.

webinar.

In these live webinars, Salman Ahmed, PhD, Chief Investment Strategist, and Charles St Arnaud, Senior Investment Strategist, will discuss the outlook for the global economy in 2019.

 

Register to join the webinar in English or French