In 2019-20, overactive policy makers, especially superdovish central bankers, and a new fiscal impulse (U.S., China and Europe, to a lesser extent) will help avoid a global recession, but flatlining growth – with activity bottoming out in Q1 2020 – will be the norm, reminding us of 2015-16 muddle-through.
The recent gathering of central bankers at the Jackson Hole symposium of August 2019 was the occasion for prominent members of the Fed to confess a sense of powerlessness when confronted with the consequences of the White House’s disruptive economic policy.
German economic indicators are particularly well-placed as precursors of global trade momentum, thanks to a combination of the economy’s key characteristics. Volumes clearly matter: with a share in global exports of 8%, Germany is the world’s third-largest exporter.
In Europe the popular narrative of people in the countryside being left behind, while urban elites benefit from globalization and technological change, is used to explain everything from the Brexit vote to France’s Yellow Vest movement.
At a global level, the Working Capital Requirement (WCR) of large companies - a measure of financial resources that companies consume to cover operating costs and expenses, and run their businesses efficiently – has deteriorated by +1 to 70 days in 2018, back to the highest (worst) level since 2012.