Five factors could influence the economic and market scenario in 2019, says Joachim Fels, PIMCO Global Economic Advisor in the report entitled “Synchronized Slowdown: the PIMCO scenario for 2019 in 5 points”.
1. The probability of a US recession that has risen to around 30% recently in the next 12 months, “the highest value since the beginning of this expansive phase that has lasted for nine years”. But – says the analyst – the signal from the models is alert and not alarm.
2. US growth, according to the analyst, will “synchronize to the downside”. The reasons are different, including the tightening of financial conditions that will begin to be felt, the effects of the fiscal stimulus that will fade and the recent oil prices that will benefit Europe, Japan and China, rather than the United States, which have become net exporters of power.
3. 2019 will be characterized by basically flat or slightly rising underlying inflation in the United States, Europe and Japan, thus remaining still below the target. However, the PIMCO analyst’s latest thesis is “that increasing productivity increases are likely to alleviate pressure on unit labor costs, and increased competition and transparency in asset markets related to the Amazon effect should keep inflation under control. of consumer goods “.
4. The FED: since the risk of recession tends to rise, the recovery in interest rate hikes after a possible interruption would be relatively unlikely.
5. The commercial war: the complex relations between Beijing and Washington could continue to be a source of uncertainty, even if an agreement on the commercial front was reached.