What happened to growth And what does low growth mean for investors
A defining feature of the economic cycle we are now going through is the constrained and fragile nature of economic growth globally. After an initial bounce post the GFC to 5.4% in 2010, global economic growth has consistently disappointed. This can be seen in the progression of the IMF’s economic growth forecasts for each year since 2012. Typically the IMF has started off looking for global growth close to 4% for the year ahead but each year has had to revise it down to around 3%, pushing the 4% bounce off into the next year. Consequently, global growth has been continuously disappointing. It’s been the same pattern in Australia, although much of the growth slowdown in Australia owes to the ending of the mining investment boom, with a pick-up in growth back to more normal levels being constantly pushed into the future. This in turn and the fragile nature of growth has seen investors regularly questioning the post-GFC rally in shares. This note looks at why growth is so constrained and what it means. (VIEW LINK)
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