WorldbankIn the Global Economic Outlook report released on January 8, it is estimated that the global economy will grow by 2.9% in 2019, down from 3% predicted in June last year. This will also be the second consecutive year of slowdown in the global economy.
According to Ayhan Cosser, director of the World Bank's Development Forecasting Bureau, global growth is slowing and risks are increasing. The bank's forecast for US economic growth in 2019 is maintained at 2.5%, lower than the 2.9% growth rate in 2018. The agency lowered its growth forecast for 19 countries in the euro zone from the previous 1.9% to 1.6%, and predicted that China's second largest economy this year, China's growth rate is 6.2%, lower than the 2018 forecast of 6.5%.
The World Bank’s report is filled with a pessimistic atmosphere. However, Van Gogh’s chief economist in the Asia-Pacific region, Wang Wei, has a different attitude. “The market may be too pessimistic and overestimate the possibility of a recession in 2019.”
She pointed out that despite the slowdown in global economic growth and varying levels of inflation,currencyThe policy continues to normalize, but the global economy will not experience a recession in the short term. “Although the economic growth in 2018 has bottomed out, the global economy continues to expand.”
The global economy is down but not yet recession
Wang Wei predicted that the United States, as one of the engines of world economic growth, will gradually weaken the correlation between inflation and wages in 2019, and the inflation rate will not exceed 2%. "This is also why we believe that global central banks cannot over-tighten and increase significantly. One of the reasons for the interest."
According to a report released by the Vanguard Group on the 2019 global economic and market outlook, the Fed’s interest rate hike cycle will end in the summer of 2019 and reach a final range of 2.75%-3% in June this year.interest rateThen pause the rate hike to reassess the economic situation. Wang Wei said that in 2019, global central banks will face depressed inflation and high levels of uncertainty in all aspects. Cautiously raising interest rates and cautiously tightening monetary policy will be the keynote of this year.
In addition, the above report predicts that global monetary and fiscal policies will also have a positive push-pull effect on the economy, and 2019 will usher in the end of the US dollar super cycle, which is good news for emerging markets.
"Although we did not say that we are looking at the global economy, we have not said that it will be better than 2018, or that it is flat. We just want to say that this year may not be as bad as the market now imagines." This is Wang Hao’s economic situation in 2019. the opinion of.
2019 Three major risks of global economic growth
In 2018, the global economy experienced multiple shocks, and more than 90% of global assets were falling. After the so-called “the worst year for global assets in history”, Wang Wei predicted that global economic growth will face three in 2019. Big main risk.
First, it is the risk of recession in the US economy. The economic expansion of the United States is basically a cycle of ten years, and 2019 is the tenth of the current cycle, which is about to reach the historical ceiling. Although the market generally believes that the US economy is already at the end of expansion, it is about to end, but Wang Wei pointed out that to determine whether the United States ends economic expansion, it should be comprehensively analyzed according to different indicators.
She said that if the "labor market" is used as an indicator, the current low unemployment rate shows that the United States is currently in the late stage of economic growth expansion. “But in addition, other data indicators, including consumption, corporate investment confidence, profit growth, and even monetary policy, indicate that the US economic expansion is still in the medium term. Therefore, considering the comprehensive consideration, we believe that the US economy is currently only Just entered the late stage of economic expansion."
The second risk comes from the Fed’s interest rate hike next year.
The end point after the current Fed will raise interest ratesinterest ratePutting it in the 3.5%-5% range, trying to control future inflation by raising interest rates in advance. Wang Wei believes that the probability of inflation in the United States in 2019 is small, and even the inflation rate will not exceed 2%. The lower the inflation, the more the Fed does not have the pressure to raise interest rates. Therefore, she judged that in the future, the Fed will gradually lower the end rate to below 3%. "The Fed will only raise interest rates once in June 2019, and the final interest rate for this round of interest rate hikes will remain below 3%."
Through the analysis of the US Treasury yield curve, the above report predicts that the US economic recession will only begin in the second half of 2020, and the probability of a recession in 2019 is only about 35%.
The third risk is the risk of a moderate slowdown in China's growth caused by foreign trade frictions.
As the world's two major economic engines, China and the US economy and financial markets are currently underperforming. Therefore, in Wang Wei’s view, both countries have the incentive to avoid further escalation of trade friction, but friction will become a normal state in the future. For China, it is now seen that domestic consumer investment confidence is weak, and the labor market is also showing downward pressure. In this case, steady growth and expansion of domestic demand has become the primary goal of macroeconomic policy in 2019.
“We also expect to introduce more monetary and fiscal stimulus policies to ensure that the economy can maintain growth of more than 6%. However, the downside risks may continue in the first half of the year, and will not be particularly noticeable after the economic growth in the second half of the year. The rebound, this is a short-term view of China's economic growth," she said.
It is worth noting that 2019 will be a good year for emerging markets. "2019,First United StatesThe economy landed softly, the second Chinese economy landed softly, and the third dollar began to weaken. In this case, the external environment should be more favorable to emerging markets. Wang Wei said.
Be cautious about investment prospects, but the outlook has improved
In the face of the challenges facing the global economy, the report released by the Vanguard Group has not been excessively pessimistic about the global market, but it also pointed out that market visibility is very low, so it is still necessary to be cautious.
“We have a slight increase in the expectation of global stock market returns over the next decade. We have seen that US valuations have returned to a reasonable valuation after experiencing a sharp fall in the fourth quarter of 2018.” Wang Wei added "And other economies, especially the Eurozone, China, Japan, etc., we all believe that we have returned to a reasonable valuation space."
In addition, Vanguard's return on global fixed income products is expected to be slightly higher than last year. The agency believes that the yield of US bonds this year will be 3% to 4%, and from the perspective of Europe and Japan, the bond market yield will be very low under the continuous intervention of central banks.
“Although it is slightly better than last year, we are still in a low-return environment. Therefore, it is very important to properly adjust your investment expectations.” Wang Hao reminded.
She also pointed out that the downside risk of the stock market is still higher than the bond market. The probability of a fall of more than 10% in any year in the next three years will still exceed 50%. The return on the US market is expected to be slightly lower than the global or international market, highlighting the importance of global diversification of future portfolios.
In addition, the agency also expects a potential return of 3%-5% in the US stock market over the next 10 years, and US stock market valuations will continue to contract as interest rates rise. For non-US stock markets, the potential rate of return is expected to be 6%-8%.
“High volatility will be the norm in 2019, and in general it should be cautious, but we are not bearish.”
(Article source: Times Finance)