A detailed analysis identifying the trends that matter, incorporating the dynamics of political risk, the business cycle and other proprietary indicators.
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Economics ResearchEconomics Products: Economics Monthly, Economics Weekly, Newsflow Monitor, Logistics.
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We consider four alternative scenarios to our central set of forecasts for 2020:
• Scenario 1: ‘Secular Stagnation’ becomes ‘Secular Stability’
• Scenario 2: The Phillips curve steepens and inflation returns
• Scenario 3: China’s private companies retrench and cut jobs
• Scenario 4: A seamless handover from monetary to fiscal stimulus
Key Message: Weakness in our Newsflow indicators is to a degree a product of weak data releases, confirmed by our Nowcasts, with which they have good relationships. Global equity outperformance vs bonds suggests markets are looking through weakness in the data at present. That weakness is widespread, seen globally, in the US and in Asia.
The global economy remains in a fragile state. We still believe a recession looks likely in 2020 for four reasons:
• A fragile truce in the trade war is unlikely to trigger a growth rebound (page 4)
• Global monetary conditions remain tight, constraining economic growth (page 9)
• Emerging markets will not provide the policy impetus to save the cycle (page 16)
• US corporate leverage means recession remains our base case (page 20)
• There are some signs of growth stabilising, but final demand remains weak
• The easing of monetary policy, so far, does not look to be sufficient
• Growth has already slowed enough for unemployment to start rising
• India has slowed so sharply that it has become a significant drag on global growth
• The current shadow financing crunch is the latest in a series of policy mistakes
• With little scope for further stimulus, India’s slump looks likely to persist
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