Global expansion to remain intact through 2019 - Wells Fargo

Analysts from Wells Fargo point out that the global economy has been growing for seven years, and they forecast that the expansion that is underway will remain intact through 2019. They see the most credible downside risks arise from potential geopolitical events.

Key Quotes: 

·The global economy in 2016 grew at its slowest pace since the worldwide recession of 2009, but there is clear evidence that global economic activity has accelerated this year. We expect that the expansion will remain intact through 2019, but a return to the supercharged global GDP growth rates of the last decade does not seem likely.”

“We estimate that global GDP growth has strengthened in 2017, and we forecast that the global economic expansion will remain intact in 2018 and 2019.”

“A debt crisis in China or significant monetary tightening by the world’s major central banks could cause global economic growth to slow sharply, but the most credible downside risks to our outlook at this time seem to arise from potential geopolitical events.”

“If our base-case scenario of continued global growth comes to pass, then inflation rates should edge higher in most countries in coming quarters. Consequently, we look for most major central banks to slowly remove policy accommodation via tapering and eventual cessation of QE programs and/or rate hikes. Many foreign currencies have strengthened vis-à-vis the U.S. dollar this year as market participants have started to expect policy tightening by foreign central banks, and we look for the dollar to trend lower versus most foreign currencies in coming quarters”