Slowing – but still growing

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Macro perspectives

We see global growth slowing as the expansion enters its final stage. The slowdown comes as the US economy becomes a drag rather than a driver. It is driven by elevated uncertainty around policy plans, the tech rivalry between the US and China and tighter financial conditions. Trade activity, business sentiment and investment plans have softened. The fading US fiscal boost should be offset by heftier stimulus in China and Europe. Slower growth and modest inflation allow central banks to pause policy normalisation, in our view. The risk of a US recession remains limited but climbs over time. We believe financial markets are being overly pessimistic, having already priced in most of this downside risk. Highlights: