Investors can expect a slight slowing in global growth and increased convergence between regions as their calendars flip into 2019.
Money management executives and economists largely see this year as one where the U.S. experiences slower — although still fairly strong — growth, while Europe and Asia potentially pick up from a benign 2018.
The International Monetary Fund's latest World Economic Outlook, published in October, forecasted global growth for 2018 at 3.7%. For the U.S., real GDP growth was 3% and Asia ex-Japan was 5.8% in the year ended Sept. 30.
"2017 was a year of synchronized growth, 2018 has been a year of divergence where the U.S. has outperformed (and) I think 2019 will be a year where we get some convergence of growth — a bit less in the U.S. and somewhat better in Europe," said David Riley, chief investment strategist at BlueBay Asset Management LLP in London. He also thinks emerging markets will do better relative to their performance in 2018.
"The bar for outperformance relative to expectation is high for the U.S. and low for Europe — so broadly speaking, I think assets in Europe and to some extent emerging markets can do somewhat better" in 2019 vs. 2018, Mr. Riley said.
Silvia Dall'Angelo, London-based senior economist at Hermes Investment Management, also cited early indications from economic surveys and forward-looking indicators as showing a growth slowdown is on the way.
"Growth divergence between the U.S. and the rest of the world is a source of fragility: historical evidence shows divergence typically is short-lived, lasting one to two years. It is conceivable (we will) see (a) more homogeneous growth picture assert itself" in 2019.
Ms. Dall'Angelo said the big question is whether the U.S. will slow down to "more contained growth rates, or the rest of the world will accelerate to stronger growth rates that the U.S. is experiencing."