The global economy slowed in 2019 and is now growing at below trend. This is mainly due to the slowdown in capital spending as the US-China trade war introduced significant uncertainty to business decision-making. It was also driven by the lagged effects from tighter financial conditions in 2018.

We expect the global economy to recover from below-trend growth rates to around trend as manufacturing picks up a bit and easier monetary policy begins to feed through, provided the US-China trade war doesn’t escalate and global labor markets continue to be strong. Within the pickup in global growth, we expect emerging economies to do slightly better than the developed world.

What we expect to see in 2020

  • The US economy will continue to do well, growing at close to trend
  • Emerging economies will do slightly better than the developed world
  • Europe and Japan should expect economic growth to recover 

What’s in the cards for the Emerging Markets

2019 proved to be a challenging year for the emerging markets as global supply chains were distorted by the trade war and global manufacturing contracted. Taiwan, South Korea and China were hit particularly hard. On the positive side, subdued inflation and the recently eased global financial conditions allowed a number of emerging economies to cut interest rates without devaluing their currencies, which should help domestic business do better. In addition, China is stimulating. In 2020, the low cost of capital, a possible depreciation in the US dollar, a de-escalating trade war and stimulus measures from key economies, such as China, should help emerging economies recover to around (or even above) trend growth rates. 

What else is covered in this 2020 outlook?

  • Monetary Policy Outlook
  • Equities
  • Government Bonds
  • Credit
  • Foreign Exchange

We’re here to help

It’s important for investors to evaluate the success of their investment strategy, but we believe it’s equally, if not more important to put a strategy in place that is geared for better outcomes. Our team has expertise to help you assess the impact of this outlook on your portfolio and put a plan in place for a brighter tomorrow.
 

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