Asset allocation views: Multi-Asset Group

We have altered our projection for the global economy this quarter by capturing a more gentle slowdown in growth over the next two years. We have revised down our 2019 forecast to 2.8% but increased our projection for 2020 to 2.7% (previously 2.9% and 2.5% respectively). The downgrade for 2019 is driven by cuts to the eurozone, UK and Japan, while our outlook for China rose marginally. However, for 2020, the upward revision is consistent across all regions.

Following the fall in oil prices, we reduce our CPI forecasts for all regions bar Europe in 2019 and 2020. Global inflation will also be hit by the potential resolution of US-China trade tensions. Although there are still hurdles to overcome for both parties, the trade outlook has improved significantly since our previous forecast.