Global outlook - January 2016

January 2016
Magnifying glass
2016 has not had the most fortuitous start with developed and emerging market equities both falling sharply.

Chinese contagion

As the Chinese government struggles to manage the transition of China from an export to a consumer led economy, we believe the likely spill-over effects from a slowdown will have a detrimental impact on emerging markets. In addition, commodity export reliant countries such as Russia, South Africa and Brazil (many of which have other structural issues) are likely to come under renewed pressure as lower demand and higher supply continue to weigh on natural resource prices.  

Look to the West

In developed markets we expect relatively strong growth, particularly in the UK and US. However, our expectations are now slightly lower given the renewed deflationary pressures across the globe and the likely reduced demand from emerging markets. In addition, in the event that the global economy takes a dramatic turn for the worse, we remain mindful of the potential downside risks particularly given the limited amount of tools policy makers have left to stimulate their economies.