Although global economy is not likely to experience an outright recession, fund manager Janus Henderson believes that growth will be very slow. Market participants seem worried about a severe economic downfall. Recent months have seen increase in sour consumer and business sentiments due to the uncertainties surrounding Brexit and the ongoing US-China trade conflict. Most economists have expressed their fears about a slowing economy while policymakers are hopeful that the situation might not be as bad as it seems. Jane Shoemake expressed concern about the fact that world economy this year will be weaker than last year in all probability.
Economist Paul Krugman however believes that global economy is sure to encounter a recession either during the latter half of this year or during the earlier half of the next year. He further fears that economic policymakers do not possess effective responses to the impending economic downturn. The European Commission at the beginning of February sharply downgraded the prediction for the euro zone economic growth during 2019 and 2020. Their forecast said that economic growth in euro zone will slow down to 1.3% in 2019 from 1.8% in 2018. The same is expected to rebound to 1.6% in 2020.
The estimates show less optimism than the earlier forecasts of EU executives, exacerbating worries that a worldwide economic slowdown is spreading to Europe. Shoemake said that the economic downturn in China is a matter of great concern but she added that the same in Europe is a matter of huge disappointment. She also said that expectations for Federal Reserve have changed a lot and so if dividends are not raised any further, dividend bonds are likely to seem immensely attractive as bond yields will not particularly be moving any higher.
On closely monitoring the release of minutes from the last policy meeting of the Federal Reserve, investors are expected to get a clearer idea about prospects of hikes in interest rates during late-2019.