Global economic expansion to remain intact at least until the end 2019 - Wells Fargo

Analysts at Wells Fargo, forecast that the global economic expansion will remain intact through at least the end of 2019. According to them, although many central banks have started the process of slowly raising rates, monetary policy remains accommodative in most economies, which should continue to support the expansion.

Key Quotes: 

“We continue to project that global GDP will grow at a solid pace in the remainder of this year and through 2019. According to the IMF, global GDP grew 3.8 percent in 2017. Not only was this pace above the long-run average of 3.5 percent per annum, but it was also the strongest rate of global GDP growth in six years. We look for some slowing in global economic growth in 2018 and 2019. Although the U.S. economy is on pace this year to enjoy its strongest annual GDP growth rate in over a decade, other major economies, including the Eurozone, China, the United Kingdom and Canada, probably will decelerate a bit this year relative to 2017.”

“However, a significant global slowdown, let alone an outright downturn, does not look to be in the cards either.”

“In other words, monetary policy is still accommodative in most major economies. Indeed, the Federal Reserve recently characterized U.S. monetary policy as being “accommodative.” If that characterization applies to the United States, where the Fed has hiked rates 175 bps, it certainly.”

“The People’s Bank of China (PBoC) has been guiding rates lower, due largely to concerns over recent signs of slower growth and worries about further deceleration going forward. A trade war with the United States, should one come to pass, would weigh on Chinese economic growth.”

“A trade war would be painful for China, but it probably would not bring that economy completely to its knees.”