IML have been cautious about economic growth for many years for a variety of reasons, and in general terms, nothing has happened to make us more optimistic. Hugh Giddy, IML’s Head of Research and Senior Portfolio Manager, reflects on the current state of global growth & indebtedness in the years since the GFC.
"I have already expressed dismay in previous musings that authorities seem to feel the cure for over-indebtedness is to get the hapless borrowers to take on more debt. Hence Europe had to lend Greece more money so that they could service the debt that was too great to be serviced without... more debt. Most economists continue to view the economic future as rosier if their forecasts of economic acceleration are any guide, and the Federal Reserve in the US is implicitly saying the same thing by raising rates and forecasting further rate rises. There are three main reasons we are so cautious in our assessment of global economic prospects: high levels of debt, demographics, and the weak underpinnings of some of the growth we have seen in recent years."