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Global economy set to decelerate in 2019 due to policy uncertainty

Publication Date: 31 Jan 2019 - By Gaurav Sharma (Editor ReachX) By Gaurav Sharma (Editor ReachX)
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The global economy looks set to decelerate in 2019 as political and policy uncertainty cloud the short-term outlook, according to a city commentator. 

Abi Oladimeji, CIO at Thomas Miller Investment, told clients the year ahead would be fraught with financial market volatility, which is likely to remain elevated as investors weigh the changing balance of risks. 

"From a fundamental standpoint, the primary concern for investors will be whether the ongoing global economic slowdown morphs into something more sinister, with important implications for corporate earnings and monetary policy.”

Oladimeji expects growth to soften in 2019. “The outlook for both the UK and eurozone is very dependent on how the ongoing Brexit negotiations are concluded. For the US, ongoing political tension between President Donald Trump and Democrat opponents over his proposed border wall has already caused the biggest shutdown in US history, and further shutdowns represent a potential source of negative shock, while the trade disputes between the US and China could yet take a larger than expected toll on the global economy.”

The Thomas Miller Investment CIO also noted that while the equity markets are currently enjoying a recovery from the pull back experienced in the fourth quarter of 2018, caution is merited due to the high level of political and policy uncertainty. 

“For this reason, we have turned somewhat more defensive on equities for now and await better opportunities to add to holdings. Fixed income and alternative investment portfolios are currently positioned in line with longer term strategic weights. We also retain a neutral stance across the major currency pairs.”

 

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