Global Macro Outlook - February 2019

Key Forecast Trends

Although US data remain robust, weakness in China and Europe suggests that the global economy continued to slow in early 2019.

But there have been some positive developments: the Fed has made it clear it won't raise rates again until at least midyear, and aggressive policy action has reduced downside growth risks in China.

Still, growth risks remain skewed to the downside.

Another thing to keep in mind: improving financial conditions will eventually encourage the Fed to start raising interest rate again, creating a hurdle for a sustained improvement in the investment environment.

In other words, the current positive environment may not last that long.

Outlook

We trimmed our 2019 global growth forecast a little further this month, to 2.7%. That's a material downgrade from a few months ago, when we expected global growth to reach 3.1% for this year.

Compared to consensus, we are still a bit more pessimistic on the euro area (1.1% versus 1.4%) and the US (2.0% versus 2.5%), and in line on China (6.2%) and Japan (1.2% versus 0.9%).

We've also trimmed global inflation a touch, to 2.7% this year from 2.9% in 2018, largely because of the lower starting price for oil.

While slowing growth represents a downside risk to inflation, high capacity utilization rates and rising wage growth represent clear upside risks. We don't expect a sharp deceleration of core inflation pressures.

Past performance, historical and current analyses, and expectations do not guarantee future results. There can be no assurance that any investment objectives will be achieved. The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AB or its affiliates.

The views expressed herein do not constitute research, investment advice, or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

Global Macro Outlook - February 2019

What You Need to Know

Key Forecast Trends

Outlook