2017 was a surprisingly calm year for the global economy. Despite the economic and geopolitical concerns voiced at the beginning of the year, fears over Brexit, Chinese debt, rising populism across Europe and Trump’s legislative agenda had negligible effect on world growth. Market volatility was low throughout 2017 and global growth was driven by a synchronized recovery across emerging and advanced economies.
Four months into 2018 and the new year couldn’t look more different from the last. Volatility has returned; global equity markets have been rocked by concerns of an inflation scare in the US and rising trade risks between the US and China, long term bond yields have fallen breaking the upward trend that has been motion since January, and yield curves have flattened. Yet, despite the recent fluctuations in financial markets, we remain optimistic that the broad-based global recovery will be sustained through 2018. Monetary and fiscal conditions are expected to remain supportive, even as some central Banks will begin policy normalisation, which should mean that the balance between headwinds and tailwinds will remain tilted towards the latter for the rest of the year.
