Goldman Sachs does not forecast a recession in 2019 but expects ‘rather sharp slowdown’

Goldman Sachs does not foresee any recession in major economies in 2019, however, slow growth of profits is noticed in the United States and Europe, head global equities strategist reported.

“We still thank that we are not moving to a recession in any large economy”, - Peter Oppenheimer from Goldman said.

“Especially sharp decline of expectations took place in the United States at the end of last year. Although the significant tightening of the financial conditions and monetary policy happened in the US …, we do not expect a recession to come but suggest a rather sharp slowdown of the economic growth”, he said, adding that markets went too far into pricing in a deeper economic decline than it’s widely expected.

Oppenheimer’s comments sounded after the general pessimistic view among market players in the United States about the direction where the market is heading in Federal Reserve growing interest rates conditions and geopolitical tensions, especially between the U.S. and China.

Natixis made asked 500 US institutional investors in December, and results showed that the vast majority considers that the longest bull market on record will finish in 2019. Among investors answering the question, 41% stated that they will decrease investments in US shares.

Grothe perspectives of 2019 are also related to trade tensions, the slowdown in China, the Brexit and political uncertainty in Europe, which makes economic forecasts more complicated.

The International Monetary Fund (IMF) lowered the economic growth forecast for 2019, referring to trade tensions. And that was happening in October last year. THe latest developments of the issue do not show much of the improvement so far. IMF considers that the global growth will be at the level of 3.7% in 2019, which lower than the previous prediction for 0.2%. All those updates are represented in IMF’s two-year report about the global economic outlook.

IMF
Source:Assignment Point
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