60 seconds with Keith Wade on the Goldilocks economy
In this video Keith Wade explains why the global economy is currently in a Goldilocks scenario.
Unstructured Learning Time
The global economic outlook is for what’s called a "Goldilocks” economy at the moment. This is because economic growth is not too hot and not too cold.
The good news is that global economic growth is doing quite well, we’re enjoying a synchronised recovery. We’re seeing growth pick up, particularly outside the US. So, emerging markets are doing better, Japan’s doing better and the eurozone is doing very well at the moment. The UK has not really shared in that as much as we think the uncertainty of Brexit is weighing on decisions about spending and that’s holding things back somewhat.
The other side of the goldilocks economy, of course, is that inflation is well-contained, particularly in the US where inflation has tended to surprise on the downside. That’s important for markets because it means that interest rates won’t have to rise as much as perhaps people thought earlier in the year.
So, combining that outlook with the goldilocks economy, and with the fall of political risks, it means that the environment for risk assets is pretty good.