IFM Investors Economic Update

As the second half of 2018 begins it appears that peak investor and participant bullishness towards the much vaunted synchronous global economic cycle has now passed. It is early days, but there are already signs that this cycle is becoming distinctly less synchronous as variations in economic growth become more prevalent. This is true in both developed and emerging markets, and across regions and individual countries. As forecasters factor this into expectations, the prospect of a distinct deceleration of growth is apparent.

Global: Investor sentiment
Investor’s current bullish attitude is fading as future concerns build


Source: IFM Investors, Sentix, Macrobond

Added to this narrative, externalities are also threatening further downside risks. These include: political risks, particularly in the Eurozone and emerging markets; geopolitical tensions; the impact of tighter monetary conditions emanating out of the US; and, arguably the most concerning risk amongst them, “trade wars” between the US, China and others (either willingly or unwillingly). In a desynchronising environment, these factors will present economic risks to both stronger and weaker economies, especially those that remain economically and fiscally fragile, have internal and external imbalances, and have central banks still looking to extricate themselves from long periods of extreme monetary policy accommodation.