Quarterly Outlook – Two Roads Diverged… We are pleased to introduce the inaugural issue of the Roubini-ETF Securities Quarterly Outlook, a macroeconomic publication jointly authored by Roubini Global Economics, a leading independent global research house, and ETF Securities Research.
The concept of a ”global” recovery is dead and buried. After the initial coordinated policy response in 2009 led to a synchronised recovery, by 2011 new crises and recessions were hitting vulnerable countries, while rampant credit boosted China and aggressive easing helped the U.S. fend off deleveraging. Heading into 2015, this divergence will continue, with the U.S. leading the way.
Decoupling and monetary policy divergence. Monetary policy from the world’s largest central banks will diverge, driven by the differing economic outcomes, with the U.S. outperforming the world’s other growth engines.
Europe faces a challenging year. The so-called ”haggard grandmother” of the world economy is failing to realize even its dismally low growth potential, and deflation will bring quantitative easing soon.
China’s ”new normal” means a complicated balance of stimulus and reform. China continues to face a difficult trade-off between reform and growth. A slow move toward reforms to improve the institutional quality of the financial sector implies that sub-7% growth looks like a realistic scenario for this year. Too much stimulus would bring near-term upside, but complicate the picture for 2016. Reforms like deposit liberalization will bring a needed rebalancing of growth.
In response to investor demand we are trialling this approach during the first half of 2015 with the intent on turning this into a long-term collaboration.
Important Information
This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”). ETFS UK is authorised and regulated by the United Kingdom Financial Conduct Authority (the ”FCA”).
