The baseline prognosis for global real GDP growth in 2017 remains in the 2.5 to three per cent range, according to a new asset allocation outlook from PIMCO.

However, its chief investment officer, Mihir P. Worah, says inflation in developed markets will pick up. He also outlined four key trends investors should keep an eye on this year:

A shift from monetary- to fiscal-led policy: As central banks shift away from years of monetary stimulus, the focus will be squarely on fiscal expansion, including U.S. President Donald Trump’s planned policies that are aimed at spending $1.5 trillion over the next decade.

The rise of de-globalization: From Brexit to Trump, borders are on the rise, with a new protectionism fueling economic and diplomatic policy in many countries.

China’s currency regime shift: Worah warns of room for policy errors in China’s multi-year journey “from a quasi-basked peg to what may become a managed or even free gloat of the renminbi,” all while facing an increasingly unpredictable U.S. trade policy.

An end to disinflation: Reflation is here as crude oil prices and strengthening real wages lead markets to higher inflation expectations.

Read:

Read the full article on Benefits Canada‘s companion site, Canadian Investment Review.

Copyright © 2017 Transcontinental Media G.P. Originally published on benefitscanada.com

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