Perseverance or Denial? We stick to our forecasts
- While macro data have been scant and mixed, the US Federal Reserve surprised with a very dovish tone
- Eurozone GDP ended 2018 in line with our expectations, with Italy in recession but France and Spain showing upside resilience. We see further slowdown ahead for the region
- The Brexit saga’s latest episode provided little clarity, although the clock keeps ticking
- Beyond the year-end technical rebound, Japanese growth should remain low
- China closed 2018 at 6.4% growth, the weakest in almost a decade but bank loans are accelerating encouragingly
- Similarly, indicators in other emerging markets pointed to a potential further economic slowdown ahead
Our January Investment Strategy published last week generated multiple comments in a welcome wave of interest for the current macroeconomic backdrop. As we wrote back then, the past two months have seen the consensus forecast move closer to the one we published in November with our 2019 Outlook, with then (and still now) sub-consensus GDP growth forecasts for the US, the Eurozone and China.
Unsurprisingly, this generalised downgrade of macroeconomic forecasts has been accompanied with a shift in worries, from whether we were exaggerating the slowdown to the possibility that recession is already upon us. In this Global Macro Monthly, we review our macroeconomic analyses for each region and update our growth forecasts incorporating the latest data, from GDP figures for the final
quarter of 2018 to business surveys and monthly activity indicators. Altogether, we end up rather comfortable with our previous numbers: the US slowing to 2.2% this year (still above potential growth) and not hitting recession over the next twelve months, Eurozone growth further down to 1.2% (after 1.8% in 2018) and China slowing to 6.1% (after 6.5%).
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.
This document has been edited by AXA INVESTMENT MANAGERS SA, a company incorporated under the laws of France, having its registered office located at Tour Majunga, 6 place de la Pyramide, 92800 Puteaux, registered with the Nanterre Trade and Companies Register under number 393 051 826. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
In the UK, this document is intended exclusively for professional investors, as defined in Annex II to the Markets in Financial Instruments Directive 2014/65/EU (“MiFID”). Circulation must be restricted accordingly.
© AXA Investment Managers 2019. All rights reserved