No sign of a pick-up in global growth

The world is headed for further deceleration. According to our Global Leading Indicator (GLI) model, which identifies trends and turning points within the economic cycle, the current environment is braced for more faltering growth as China and other emerging markets trace a downward spiral. Despite periodic positives out from the US, the reality is that today’s backdrop remains impaired by structural headwinds. Poor productivity and unfavourable labour force demographics are imposing a halt on any meaningful recovery. Policy-makers are stepping up efforts to pare back the slowdown but fiscal responses are lacking and monetary programs offer only cyclical comfort, not a structural one. Following a decade of escalating money supply, growth remains distinctly underwhelming. In fact, it would be arguable to say that the only real contribution from these central bank programs was to inflate risk assets and encourage speculative bets. With no inflection point in sight, we expect central banks to continue operating these otherwise ineffective projects, as they largely have no choice. (Vimal Gor, Head of Income & Fixed Interest)