The Strategist

Goldman Sachs expects acceleration in global economic growth

02/28/2019 - 02:54

The chief economist of the American investment bank Goldman Sachs Jan Hatzius believes that the world economy has already passed the lowest point and will only be growing in the near future. Such findings, based on an analysis of February activity indicators, are markedly different from other forecasts, which predict a further slowdown in the economy.

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“There are certain signs of recovery, which suggest that we will soon see beginning of a gradual growth,” chief economist at Goldman Sachs Jan Hatzius and analyst Sven Jari Stehn said in an analytical note for investors, quoted by Bloomberg. The investment bankers made this conclusion based on an analysis of the February GS indicators of economic activity, which turned out to be better than expected.

The expectations of GS analysts contradict many other forecasts, which expect a slowdown in the economy in the near future. At the end of January, IMF economists lowered the forecast for global GDP growth in 2019 by 0.2%, to 3.5%. The decline in global growth in the fund is attributed to the constant slowdown in the growth of the economies of developed countries, as well as the temporary “slowdown” of emerging markets, including Argentina and Turkey. The growth of the Chinese economy is also slowing down due to tightening of the financial settlement and trade disputes with the United States.

In turn, Goldman Sachs expects a revival of the Chinese economy, which is confirmed by Bloomberg’s own indicators. The indicators highly the average probability of growth in quotations of the largest companies in China, including those operating in the real estate sector, as well as local prices for iron and copper ore and growth of confidence in the small business segment of China.

Goldman Sachs considers Europe to be the weak link: “Italy has already entered recession, Germany is close to this, and most of the other economies in the region are growing more by inertia.” As for the US, GS economists believe that the dollar will decline, especially given the more cautious Fed policy. At the same time, analysts adhere to positive forecasts in relation to risky assets in the US, but note that "these assets are obviously under pressure from general negative expectations regarding the prospects for economic growth."