The global economic outlook for 2020

02 January 2020

Despite a slowing global economy, it feels like there’s a lot to be optimistic about. While there are geo-political issues at large across all continents, we can already see them giving rise to longer-term investment opportunities. From the infrastructure opportunity that comes with a growing urban population, to the health care opportunity of an ageing demographic and the renewable energy opportunity of climate change. There’s no doubt we’re on the cusp of phenomenal global change, and that’s without mentioning the impact of technological advancement and the rise in sustainable products and services.

Of course, significant change can feel painful in the short-term – whether that’s because of political uncertainty or volatile markets. Which is why we will continue to diversify both globally and across different asset classes to protect you from short-term fluctuations, while making sure we can take advantage of any exciting longer-term opportunities as they arise.

Outlook for US

Positive in the medium term
Despite economic growth slowing in 2019, the outlook for 2020 remains positive. Unemployment is at a 50-year low, which is driving consumer confidence, and an easing of monetary policy continues to give business a much-needed boost. That said, the autumn presidential election has the potential to unsettle markets, as could persistent political posturing around US-China trade negotiations. Any volatility may present tactical investment opportunities, but we will largely continue to invest in businesses with strong balance sheets that are well-positioned to deliver returns in a slow growth economy.

Look out for

3 November
The autumn presidential elections will dominate the US agenda this year. The strength of the economy is one of Trump’s key weapons, so he’s likely to do everything in his power to keep things on an even keel.  

Interest rates

No change
The Chairman of the Federal Reserve, Jerome Powell, indicated that US interest rates are unlikely to change in 2020, if the economy remains on track.  


On the rise
Inflation could rise as low unemployment continues to drive wage growth and low interest rates encourage borrowing. The US-China trade war could also continue to push up the price of imports and the cost of manufacturing. 

Outlook for UK

Continued uncertainty for now
Despite the Conservatives regaining power in the general election, there is a long way to go in resolving the Brexit issue. Even assuming the UK leaves Europe on the 31st January as currently planned, it will be some time before the dust settles on trade negotiations and new business regulations. Domestic stocks will continue to be under-valued, which could present short term opportunities, but we will continue to focus on businesses that are well-positioned to weather the storm and are not entirely domestically focused.

Look out for

31 January
We’ve been here before, but perhaps this will be the day that the UK’s membership of the EU will finally cease. Time will tell, but should there be a delay, we expect markets to take it in their stride.

Interest rates

No change
In their last meeting of 2019, The Bank of England voted to hold interest rates at 0.75 per cent, citing the lack of economic growth as the key reason behind the decision. Unless the UK quickly lays Brexit uncertainty to rest, the Bank of England will be under pressure to avoid any interest rate rises until the economy is on surer footing.  


On the rise
Much like the US, low interest rates and low unemployment could result in rising inflation. We will be keeping a close eye on this in 2020. There are a number of factors at play, including the strength of sterling and the impact of greater political certainty on economic growth. 

Outlook for Europe

Lukewarm European monetary policy continues to be a source of concern for investors. Negative interest rates have not helped to kick-start the economy, and a change in leadership at the European Central Bank (ECB) has so far made little impact. Europe’s manufacturing sectors continue to suffer due to a decline in demand from emerging markets, and the domestic market has also softened. It’s hard to see a compelling reason to invest heavily in Europe. Perhaps the ECB’s proposed strategic review of monetary policy – the first of its kind since 2003 - will bring some better news in 2020.  

Look out for

ECB strategic review
Christine Lagarde, President of the ECB, has announced a strategic review of monetary policy. Lagarde said the review will involve thorough analysis and an open mind and promised that “every stone will have to be turned and every option will have to be examined”.

Interest rates

Unlikely to change
With little sign of recovery in the European economy, and a strong US dollar, interest rates will almost certainly remain in negative territory. While it’s hard to see further cuts being anything other than counterproductive, we can’t completely rule it out.


No material change
Economic and political stagnation, plus an already weak euro, mean that inflation is unlikely to rise in the near future. Indeed, the ECB has projected a slight reduction in the rate of inflation in 2020 to 1.1%, rising to 1.4% in 2021.

Outlook for Emerging Markets

Keeping a close eye on opportunities The US-China trade war, political unrest in Hong Kong, and concerns over the state of the Chinese banking system continue to bear down over emerging markets. The global easing of monetary policy should benefit this region in 2020, though – particularly if it stimulates global growth and consumer demand. Emerging markets have strong prospects for demand growth as consumers benefit from economic development.  Exposure to this theme however can be achieved through global companies listed in developed markets.

Look out for

A trade deal
Towards the end of 2019, emerging market stocks rose sharply on the hope of a resolution to the US-China trade war, underlining the importance of this issue to these markets. If the US and China can come to a suitable trade agreement, emerging markets will be sure to benefit.

Interest rates

No change
We think that interest rates across this region are likely to stay broadly at current levels with some divergence on a country by country basis. One risk is that inflation is at historic lows for this region, which could give rise to rate cuts. At the same time, debt in emerging markets has risen to $55 trillion, so any rate increase would have wide-reaching repercussions.


No change
Inflation is generally at a comfortable level in these economies, and the central banks have flexibility to move either way to protect this position. Wage hikes and soaring food prices could give rise to increased inflation, but this should not give too much cause for concern since inflation rates are low in historical terms.

Please navigate to a service or product page and add the document to your brochure to continue.

Name your brochure
Your details
Thank you!

Your brochure is on its way.

Brochure Confirmation - your brochure is on its way.

We hope you find this useful.

The value of investments and any income from them can fall and you may get back less than you invested.