In the Global Outlook, the Only Constant Is Change
In my August webinar on the global outlook, I opened by noting that during this century, the changes in the global economic picture have been the most consequential since Bretton Woods, with new powers, dramatic crises, and constant change. The bottom line in the outlook is that we’re still in a slow-growth world, one struggling to adjust to post-recession dynamics.
While the Brexit has been getting significant attention, China’s persistent slowdown is likely more momentous for U.S. manufacturers. China has had previous slowdowns, but the nation has metamorphosed—the current China has astronomically more global economic significance. Trade data are telling us that weakness is a consistent fact of life, at least for now. Leadership is the biggest risk as the country shifts from manufacturing to services and small businesses, a change that requires a different style of governance. China’s a risky proposition right now.
Across the globe, markets remain fearful of deflation. Why is deflation so pernicious? It discourages consumers from spending (since they will wait for prices to decrease) and businesses from investing—a negative pricing climate prevents the incentives important for economic growth. In examining consumer price inflation in Japan, the UK, and the eurozone, I find that we’re hugging the zero line but not in a deflation spiral. Fears of deflation are not unfounded, however, with implications for monetary policy and government bond markets.
Please watch the 45-minute recording of my webinar for my full analysis, in which I cover:
- A slow, unsteady globe
- The odd spectacle of negative interest rates
- The UK’s tantalizing surprise
- MAPI members’ initial reactions to the Brexit
- China’s transition, Japan’s frustration, and Asia’s struggle
- Brazil and Russia: glimmers of light
- Canada and Mexico: regional promise, global burdens
- The U.S.: struggling with global forces and structural challenge
- New thinking for a post-crisis, post-Brexit world
As I noted in my presentation, I welcome MAPI members to contact me to discuss aspects of the outlook relevant to their specific markets and countries. I’m also available for presentations (virtual and in-person) for member events, including senior management meetings.