- Asset Class Return Forecasts - Q4 - 2019
Asset Class Return Forecasts - Q4 - 2019
Tuesday 12 November 2019
Our medium-term baseline scenario is that of a late business cycle slowdown supported by the dovish U-turn of central banks. We expect economic growth to move below potential for most developed economies in 2020, a trend that will be further exacerbated in 2021 by a deteriorating cyclical environment and still anaemic global trade. Nevertheless, growth is expected to stay in positive territory.
In the developed economies, central banks are expected to cut their policy rates to mitigate the economic slowdown. The ECB has moved to an unconventional monetary policy that will protract long into the future.
Trade war escalation and impact on world trade and economic growth
Trade tensions re-escalated during the summer. Starting on 1 September, the US Administration introduced new tariffs and China retaliated simultaneously. More tariffs are likely from the US side, including an increase in tariffs already in place from 25% to 30% and new tariffs on the last tranche of imported goods from China. Concerning extra-tariffs measures, in August the temporary licences granted to US companies to operate with Huawei were extended upon their expiration but, so far, with no additional structural guidance.
Central banks have confirmed the shift to a much more accommodative stance
In their September meetings, both the ECB and Fed confirmed their easing mode. The ECB delivered a full monetary policy package (pre-announced in previous months), combining conventional and unconventional tools, together with the introduction of new measures aimed at reducing the sideeffects of negative rates.
Brexit update: Moving towards the October 31st deadline
What are the different options expected and what potential impacts on the market can be foreseen? Amundi leads you on a clearer path with a dedicated infographic analysis.