The era of economic slowbalisation
Sisyphus was punished by the gods by having to repeatedly roll a boulder up a hill after it rolled back down each time he reached the summit. Today, markets are subjecting the world’s central bankers to the same punishment. According to César Pérez Ruiz, PWM’s Head of Investments & CIO, “each time central banks attempt to normalise monetary policy, the ‘market gods’ compel them to revert to easing mode and lower rates. The result is we are living in an era of economic slowbalisation.”
Today, “the global economy is flying on one engine, with manufacturing in recession and services keeping the economy airborne. Populism-driven fiscal stimulus is keeping services afloat for now and central banks are doing everything possible to support their economies. He concludes that he doubts these “‘market gods’ will relieve the central bank Sisyphuses in the end and allow monetary policy to normalise. Should this fail to translate into positive economic growth, we could eventually see more direct fiscal easing from more populist governments.”
Indeed, markets are engaged in a game of tug-of-war, according to PWM’s Chief Strategist and Head of Asset Allocation & Macro Research, Christophe Donay. “The world economy and financial markets are being influenced by two opposing forces… On one side are trade tensions and an ageing economic cycle … raising questions about an impending recession. On the other are central banks, which are pulling out all the stops to prolong the expansion.”
One certainty about what the future holds is continued momentum behind the Sustainable Development Goals (SDGs), from both the public and private sectors. Marie-Laure Schaufelberger, Investment Stewardship for Pictet Group expands on the investment opportunities that the SDGs present, emphasising that “… commitment from the private sector is essential to achieving these goals, and many investors are already allocating accordingly, having recognised the financial opportunity presented.”
Each of the 17 SDGs represent opportunities for forward-looking investors, particularly those who are keen to contribute making our planet better and more sustainable for all. Today there is “USD 2.5 trillion per year still needed beyond spending committed by governments” and from clean water and sanitation to affordable and clean energy and good health, developments in technology will play a big role in achieving these goals. Investors take heed.