Standard Chartered Bank’s Wealth Management Advisory has predicted strong economic growth with rising inflation for this year in its Outlook 2018 report. As the global economy gradually heats up and the pivot towards reflation continues, investors are advised to manage downside risks, with a preference for equities.
In a statement on Monday, Standard Chartered Bank’s Wealth Management Advisory specifically predicted a continued gradual pivot to a more reflationary outcome, combining modestly stronger economic growth with rising inflation.
The Chief Investment Strategist at Standard Chartered Bank, Steve Brice, said, “Growth accelerated in 2017 but inflation did not. We believe a gradual ‘heating up’ of the global economy is likely in 2018, with robust economic growth and inflation finally increasing.
“Our Outlook 2018 report is designed to help our clients navigate these market conditions.” According to the statement, the Outlook 2018 report expects economic growth to continue to simmer, pointing out that the “Goldilocks” environment of strong growth and limited inflation is likely to extend into the early part of 2018.
The statement read, “Continued earnings growth means equities and corporate bonds have room to extend gains going into 2018.
“Turning up the heat on inflation: Inflation is the main risk to this “Goldilocks” scenario, especially further into 2018. A larger-than-expected rise in inflation would mean the environment could turn too hot, forcing Central Banks to tighten policy more aggressively than markets currently expect.”
The Regional Head of Wealth Management for Africa, the Middle East and Europe, Standard Chartered Bank, Gautam Duggal, said, “We suggest investors continue to tilt towards equities, which generally do well in the late stage of the economic cycle, as we do not believe valuations are a constraint to a strong performance in 2018.