Macroeconomic Outlook 2020: Fragile 20/20 vision
In this 2020 outlook we discuss our macroeconomic forecasts for the coming couple of years.
Fears of a 2019 global recession have abated as major macro risks have started fading. However, for 2020 we think actual GDP growth is unlikely to be able to exceed potential in the key economic regions. Too much damage has been done, old headwinds are still with us and new sources of uncertainty have emerged. Our baseline for 2021 is that global growth slows down to quasi-stagnation. A lack of policy fire-power will be a dominant theme in the coming two years. Monetary policy and other policy initiatives have likely decreased the chances of developed economies stalling in 2020. As a result, we see ‘bear-market’ moves as a tail-risk rather than a base case. However, the macro outlook, coupled with current valuations, means we are unlikely to see 2020 returns matching those of 2019.
Click on the below links to read the full executive summary:
- Stalling as the traffic light turns green(ish) by Gilles Moec, AXA Chief Group Economist
- Investment Outlook – 2020: Approach with cautious optimism by Chris Iggo, CIO Core Investments, AXA IM
Euro area growth should continue to slow in 2020, falling to 0.7% from 1.2% year-on-year, as spillovers to the broader economy outweigh any globally- driven improvement in manufacturing and trade.
Uncertainty over trade policy and the 2020 Presidential Elections are key unknowns in determining the US outlook for the coming years.
A structural slowdown will take the Chinese economy into a new chapter of sub-6% growth, starting in 2020
Growth has been weak in 2019 but we expect some rebound in 2020.
Asian growth is likely to stabilise in 2020, with a US/China trade truce and policy stimulus roughly offsetting slower global demand.
Asian growth story will continue to present attractive long-term investment opportunities backed by structural drivers.
We head into 2020 with much tighter valuations - but the spread level between Investment Grade and High Yield is still attractive.