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Alliance Bernstein: Global Macro Outlook January 2019

January 29, 2019

KEY FORECAST TRENDS

  • When 2018 began, the global economy was in a cyclical sweet spot. But gathering headwinds—including those caused by debt, demographic trends and populism—changed that, leading to slower growth and poor risk-asset returns.
  • Investors who expected last year to be the one when conditions returned to normal were disappointed. The definition of what’s “normal” needs a reset.
  • We expect global growth to continue to slow in 2019—a normalization, if you will, back towards growth rates more consistent with a soft secular backdrop.
  • To be sure, this doesn’t add up to recession. But softer growth and reduced liquidity do increase vulnerability. If any one of several key risks becomes reality, it could easily push us toward a worst-case outcome.
  • If that happens, investors will rightly question what’s left in the monetary policy toolbox. We fear the answer is likely to be “not much.”

 

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