The battle between growth and deflation

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Cesar Perez, global head of Investment Strategy at JP Morgan Private Bank, provides his latest investment insights, with a focus on the global economy and the battle between growth and disinflation.

The global economy is running at different speeds, and while the US is set to tighten monetary policy, Europe and Japan are heading in the other direction.

Global growth is on the mend

Global growth is forecasted to grow at 3.5% in 2015. Developed markets are driving this increase in growth. Emerging markets are still growing but less quickly than last year. As a consequence, we favour developed markets more than emerging markets from an investment perspective.

Global financial markets are likely to remain volatile

Healthy economic growth should support corporate profits in developed markets, which we believe will be a key investment theme for this year. Unlike in 2014, we believe the probability of the central scenario is lower and tail risk probability will be higher, both for positive and negative scenarios. In Europe fast credit growth could be a positive tail event. An increased risk of political disruption could be a negative tail event, especially with several elections coming up in the euro area (including the Spanish general elections).


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