Markets: Trade policy and China are major risks – Westpac
Bill Evans, chief economist at Westpac, suggests that trade disruptions will be a certain theme through 2019.
“We have seen that trade concerns have also weighed on the Chinese economy. Other more significant drags on Chinese growth have been winding back the shadow banking system and pollution policy. We expect credit policies, an easing in pollution restrictions and direct fiscal stimulus will all be used to maintain a managed slowdown in China. We are targeting a 6.1% growth rate in 2019 down from 6.4% in 2018.”
“Other regions are less important to the overall global view. Emerging markets will suffer under the weight of rising US interest rates and a higher USD. Japan will be preparing for the introduction of a new consumption tax. Europe will be impacted by the China/emerging markets slowdown and homegrown concerns around Brexit; Italian instability; political unrest in France and Germany; a gradual tightening of monetary policy as the ECB halts its balance sheet expansion from the beginning of 2019. European Parliamentary elections due mid year could be a focal point for many of these issues.”