John Greenwood’s quarterly economic outlook – Q2 2018

Video | 26 April 2018 | John Greenwood, Chief Economist, Invesco Ltd


Recent data suggests that the global economic expansion is slowing down. Should we be concerned?


Looking forward from a period of strong economic growth, we are now seeing signs that momentum is weakening in the major global economies. As yet this does not spell the end of the recovery – only a slowing in the pace.

Mid-course corrections or slowdowns during economic expansions are quite common. On this occasion there are two main headwinds to growth. First, with the US Federal Reserve (Fed) raising interest rates and simultaneously reducing the size of its balance sheet, the US economy will become critically dependent on the ability of the banking and financial system to create new credit. Second, the trade confrontation with China initiated by US President Trump could have a temporary destabilising effect on economic activity.

Inflation has also been a key concern of market participants. For the past eight years, inflation has been running below the central banks’ target rate of 2% in the US, the Eurozone and Japan. Conventional analysts have expected this to rise in conformity with the ‘Phillips Curve’; however, as long as the underlying monetary growth rate remains low in these major developed economies, there is no reason to expect an inflation outbreak that would threaten to end the business cycle expansion.

Read the full quarterly economic outlook form John Greenwood

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Important information

Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

John Greenwood

John Greenwood

Chief Economist, Invesco Ltd.

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