According to the fund manager, Janus Henderson, the current economy of the world is headed for a period of dull and low growth, but the risk of an outright recession remains small. However, the participants of the market are increasingly worried about the prospect of a serious economic downturn this year. After a long run of the United States-China trade war and uncertainty around the United Kingdom’s exit from the European Union has sourced business and consumer sentiment in recent months.
Also, most of the economists in the world, as well as some the world’s business elite, have agreed that economic growth is slowing, but the policymakers have expressed some hope for a soft landing rather than a full-blown recession. Speaking to a national media on Monday, the investment director of the global equity at Janus Henderson Investors, Jane Shoemake told that, “There is a slowdown in the momentum of the global economy. I don’t think the economy is going to be as strong as it was last year.” She added that “Our central forecast is not for a recession, It is just for dull, low growth.” However, the economic growth in Europe has been a real disappointment until now.
In contrast, Paul Krugman the Nobel Prize-winning economist has already warned earlier this month that there is a significant chance the world economy is headed for a recession either later this year or early next year. Krugman warned there is quite a good chance of a recession in 2019, adding he was worried economic policymakers not to have an effective response if the economy slows down.
At the early start of February, the European Commission has sharply downgraded its forecast for eurozone economic growth in 2019 and 2020. The Commission said eurozone growth will slow to 1.3 percent this year from 1.9 percent in 2018 and is expected to rebound in 2020 to 1.6 percent. The estimates were markedly less optimistic than the EU executive’s previous forecasts, exacerbating fears that a global economic downturn is spreading to Europe. Shoemake said that an economic downturn in China, the world’s second-largest economy, has heightened concerns of a global recession but Europe has been the real disappointment.
She added that “We have had a massive change in what expectations are for the Federal Reserve and so if they don’t raise any further, dividend yields regular payouts from stock are going to look very attractive because bond yields are not going to be moving any higher particularly.” On Wednesday, many of the investors are likely to closely monitor the release of minutes from the Federal Reserve’s final policy meeting. They are expected to give investors a better idea about the prospect of any interest rate hikes later this year.