Global Macro Outlook for 2020

Asset Allocation & Solutions | January 13, 2020

Frances Donald, Global Chief Economist and Global Head of Macro Strategy

Q1 | 2020 global macro outlook - The latest views from our asset allocation team

Key themes on the economy and capital markets

Introduction

At the start of the new decade, geopolitics aside, there seems to be much to be optimistic about: a U.S.-China trade agreement, accommodative monetary policies from global central banks, and early signs of economic recovery in China. For a change, the last two weeks of December were marked by a sense of calm in the markets.

However, the removal of tail risks doesn’t mean investors can expect a smooth ride in 2020. While the overall environment should be supportive of risk assets, there are key evolving macroeconomic themes that, in our view, will shape the year ahead.

  1. We expect 2020 to be a year of two halves: a stabilization in the first six months of the year, followed by an acceleration in the second half. We expect to witness the first signs of recovery in Europe, before seeing it take hold in the United States, and then, China.
  2. Fiscal spending will increasingly replace monetary policy as the tool of choice used by policymakers to revive global growth. We expect the shift toward fiscal stimulus to become more evident as we head further into 2020, and for its positive impact to become gradually visible toward the second half of the year.
  3. U.S.-China trade relations will continue to be a key market focus—attention should soon turn to phase two of negotiations and there’s no reason to assume that it’ll be easy. The fact that 2020 is an election year in the United States is likely to introduce yet more unpredictability into proceedings.
  4. The recovery in China will be modest—a view underscored by our belief that any forthcoming stimulus measures from Beijing will be small and domestically focused. As we’ve stated previously, this suggests investors expecting a global growth jolt from China’s recovery should temper their expectations.
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About the Author

2018 10 Author Donald Frances 2 Frances Donald

Global Chief Economist and Global Head of Macro Strategy

The opinions expressed are those of Manulife Asset Management™ at the time of publication, and are subject to change based on market and other conditions. The information in this article including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Manulife Asset Management disclaims any responsibility to update such information. All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment or legal advice. Clients should seek professional advice for their particular situation. Neither Manulife Financial, Manulife Asset Management, nor any of their affiliates or representatives is providing tax, investment or legal advice. Past performance does not guarantee future results. This material was prepared solely for informational purposes, does not constitute an offer or an invitation by or on behalf of Manulife Asset Management to any person to buy or sell any security and is no indication of trading intent in any fund or account managed by Manulife Asset Management.

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