GS say growth to pick up in response to easier financial conditions and an end to the trade escalation.
- annual-average GDP growth is likely to rise only modestly from 3.1% in 2019 to 3.4% in 2020,
A little more from the note:
risk of a global recession remains more limited than suggested
- by the flat yield curve, which partly reflects a structural decline in the term premium,
- and the low unemployment rate, whose predictive value for inflation and aggressive monetary tightening has fallen.
We also take comfort from the absence of significant private sector financial deficits in all but a few advanced economies.
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Our confidence that growth will improve sequentially is highest in the US
- and the UK, where we expect the Brexit drag to reverse and fiscal policy to ease
We look for a more gradual pickup in Europe, where the fiscal boost is likely to remain (too) limited, and Japan, where we are watching carefully for a negative impact from the October consumption tax hike. We expect growth in China to slow modestly from just above 6% to just below, in line with gradually decelerating potential.
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In our baseline forecast, most DM central banks stay on hold in 2020.
- At least in the early part of the year
however, the risk is on the side of further easing, especially in the Euro area and Japan
