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Schroders downgrades global forecasts over geopolitical fears

Schroders is set to downgrade its global growth forecasts for the first time in more than 18 months.

The manager is set to downgrade next quarter on a host of macroeconomic and geopolitical fears, chief economist Keith Wade announced at Schroders’ investment conference in Edinburgh today, despite raising it every quarter for the last year and a half.

These include a potential reduction in quantitative easing in the Eurozone, the impact of trade talks between the US and China, and indebtedness in the UK.

Wade says: “We would say the world economy is growing pretty robustly, but the best is probably behind us…The momentum is beginning to wane.”

While Wade noted the firm still expects global growth to come in above 3 per cent, for any “positive surprises” it will have to perform “even better than it was before”.

Wade noted that the US was experiencing its second longest expansion on record with nine years of growth, the previous high coming in at only 10 years.

Wade says: “All good things must come to an end”.

Wade also expressed fears over the knock on impact for supply chain countries like Japan as the USA and China continue to threaten tariffs on trade.

“When we as investors think about the impact of trade wars, we need to think beyond the US and China…this dispute could go on for a long time…we are not forecasting a trade war but a long standoff.”

Wade added that in the US employment rates remain above equilibrium but that wages will continue to rise, causing stagflationary pressure.

Other growth factors include retail sale stagnation in the UK.

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