Easing trade tensions and easier monetary policy will lift global growth from 2020 first quarter, according to Morgan Stanley economists, who say emerging markets will drive this, given US growth’s late-cycle stage. Downside risks include the potential for more tariffs and late-cycle challenges in the US like corporate credit risk and poll uncertainties.
“Global growth should recover from 1Q20, reversing the downtrend of the past seven quarters as trade tensions and monetary policy are easing simultaneously for the first time since the downtrend began,” the economists led by Chetan Ahya wrote in a note.Easing trade tensions and easier monetary policy will lift global growth from 2020 first quarter, according to Morgan Stanley economists, who say emerging markets will drive this, given US growth's late-cycle stage. Downside risks include the potential for more tariffs and late-cycle challenges in the US like corporate credit risk and poll uncertainties.#
If the US government imposes additional tariffs on Chinese goods in December, global growth will decelerate further in the final quarter of this year and the recovery will be delayed until the third quarter of 2020, global newswires cited the authors as writing.
Still, a mini-cycle recovery should kick in next year. Constant interruptions to the global cycle over the past decade have kept a lid on any overheating and helped avert a steep recession, they said.
“Hence, with this mini-cycle recovery – the third in the last decade – we believe that the late-cycle expansion can be extended,“ they wrote.
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