INSUBCONTINENT EXCLUSIVE:
Most major economies have likely averted recession for now but growth will remain subdued in 2020, according to Reuters polls, despite the
recent round of central bank stimulus and signs of a preliminary truce in the US-China trade war.
Several big central banks have cut
interest rates this year, responding to a slowdown that few policymakers had expected around this time in 2018
That loss of momentum in the global economy was driven in part by a crunch in world trade.
But with rates still low in developed economies,
and with many emerging economies snagged in the slowdown, further impetus for global growth will need to come from elsewhere.
That will have
implications for financial markets, which had a banner year in 2019, with Wall Street near a record and other equity markets flying high on
was is only a slightly-improved economic backdrop and tentative steps on trade.
While a few economies, notably the United States, have
stabilised very late in one of the longest expansionary periods on record, a vigorous snapback to above-trend performance is not likely,
cuts from the Federal Reserve this year, and even with economists now reasonably confident an initial Washington-Beijing trade deal will be
The chances of an outright recession in major economies have receded since the middle of the year, when they jumped to highs not seen in
Reuters polls since the financial crisis
That is partly down to the latest round of global rate cuts.
But in India, for example, where the Reserve Bank of India has slashed interest
rates five times in succession by 135 basis points to 5.15%, making it the most aggressive major central bank in the world in 2019, growth
is still slowing and the property market is in the doldrums
by raising its benchmark repo rate by a quarter point to zero, as expected
But the Riksbank also indicated that it expected to keep rates unchanged through 2021.
Bank of Japan Governor Haruhiko Kuroda signalled his
resolve to keep the money spigot wide open, but suggested that no immediate expansion of stimulus was forthcoming.
Other major central banks
were also forecast to stay on the sidelines in 2020, according to economists in Reuters polls.
There is a growing sense among analysts
polled this year that central banks not only have lost their ability to lift inflation, which still remains tame, but also may be losing
their post-crisis powers to drive up asset prices.
While the rise in financial assets has handily outpaced underlying economic performance,
that disconnect may end next year, according to currency strategists, equity analysts, fixed-income strategists and global fund managers in
By any yardstick, financial markets have put in a very creditable performance for 2019
Reuters in the latest global poll were forecast to make single-digit gains in 2020
Major government bond yields, meanwhile, were not expected to rebound from their latest lows
latest round of central bank easing
Housing market experts are not optimistic about any kind of major rebound in the coming year.
And in the foreign exchange market, the US
Even this year it has continued to eke out a small gain despite the fact that the Fed has cut rates on three occasions
