While fundamentals remain good for the world economy, there are ominous signs that warrant caution from investors going forward, according to analysts at National Bank Financial.
Key Quotes
“A commercial spat now threatens to evolve into a full blown trade war after the imposition of tariffs by the U.S. and retaliatory measures from affected trade partners. Even a small deceleration of trade flows could have negative repercussion on world GDP growth and hence raise the likelihood of financial stress and defaults, more so considering record levels of leverage.”
“One source of encouragement, however, is policy stimulus which will continue to support growth. Enhanced uncertainties to the economic outlook and the persistence of low inflation should limit the extent of monetary policy tightening by central banks while governments could deliver additional fiscal stimulus to sustain growth.”
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