FROM THE GLOBAL CIO OFFICE By Candice Bangsund, Vice President and Portfolio Manager, Global Asset Allocation
2020 OUTLOOK: RECEDING RISKS REVITALIZE THE GLOBAL ECONOMY
Over the last year, sentiment remained fragile as unnerved investors digested a flurry of trade-related and geopolitical headlines that sparked fears of a pronounced global slowdown. The good news, however, is that we are likely past the point of peak pessimism on the state of the global economy, with some nascent signs that the worst may finally be behind us.
While the consumer has been a pivotal source of strength, improving manufacturing results out of the US, Europe, and China have validated our expectations for a reacceleration in global growth after several months of trade-induced angst that’s battered the factory space.
Encouragingly, the US-Sino trade spat has subsided amid some conciliatory signals from both sides and a willingness to come to some sort of truce that would remove a key overhang that’s plagued sentiment and growth. Tensions have receded as President’s Trump and Xi get closer to signing a “phase one” deal, with the potential for a ceasefire or even a rollback in existing tariffs. And across the Atlantic, the likelihood of a disorderly Brexit scenario has declined substantially, limiting the potential for a severe economic fallout in Europe.
Finally, policymakers across the world have stepped-up and pledged their unrelenting support and are no where near removing the proverbial punchbowl. The plethora of growth-enhancing efforts from both central banks and governments should ultimately prove successful in revitalizing the global economy and counter the turbulent political landscape at hand as we head into 2020.