September/Autumn 2018

Page 30

brand voice - Thomas Miller investment

A Whistlestop Tour

of the Economic Landscape A review of the backdrop

By: Abi Oladimeji Chief Investment Officer Thomas Miller Investment



uring 2017 investors enjoyed several positive surprises. Economic growth was stronger than consensus forecast at the start of the year, inflation was notably lower than expected in most major economies (with notable exceptions like the UK) and corporate profitability recovered from the weakness seen the previous year. All these meant that investors’ expectation at the start of 2018 was that growth would accelerate further over the course of this year. The reality, however, has fallen short of those expectations. Rather than a pick-up in growth rates in 2018, the momentum of economic growth has slowed across the major developed economies. The notable exception is the US which is being supported by a temporary fiscal boost from tax cuts and increased government spending. In addition to a broad based slowdown from the growth rate achieved in the second half of 2017, the global economy’s performance since the turn of the year has been uneven. Indeed, economic releases in recent months have demonstrated the extent of the ongoing divergence in growth momentum across major economies. For instance, data for the second quarter showed that the Euro-zone’s economy expanded by 0.3% over the previous quarter, the weakest pace in two years. In contrast, the US reported a growth rate of 4.1% for the second quarter of 2018, the fastest pace of growth since the third quarter of 2014.