Global economy bounces back

Global economy bounces back

Investors can expect an upturn in the global economy with the negative trends experienced earlier this year now in reversal, according to an asset management company.

In an update, asset management company Principal Global Investors said positive data including recent employment and manufacturing figures out of the US and greater stability in China have led to a “mild cyclical upturn” in the global economy.

“Validation of the upturn includes stellar US job reports and a clear rebound in manufacturing data, along with the return of consumer confidence and solid housing activity leading to rising home prices which add to wealth,” the report said.

 

Stability in China and a pick-up in Europe, the report said, is also a sign that the only way is up.

“China looks to be smoothing out, with consumer confidence returning, worries about currency devaluation dissipating and other signs that, while there may not be a growth rebound, there is a cessation of a two-year deterioration,” the report stated.

However, while there is evidence of an upturn, Principal Global Investors warned investors not to expect an “easy upward ride”.

“Japan remains seemingly immune to the positive trends occurring elsewhere, with a fourth quarter of economic shrinkage on the back of weak production and retail sales – despite stimulus efforts of the Bank of Japan,” the report stated.

“The US Federal Reserve is still cautious despite the generally more positive outlook. While Fed Chair Janet Yellen virtually ruled out policy reversals or negative interest rates, she overtly acknowledged the clear impact of global events on the US – and pundits are expecting a rate hike."

The report also noted that if the upturn is “real”, cyclical assets should outperform.

Global economy bounces back
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