RBC Wealth Management, part of the Royal Bank of Canada, remains confident in the economic expansion but warns caution is needed as the world economy might be “in the later stages of the cycle”, according to its Global Insight 2019 outlook report.
The firm said the outlook was positive for most major economies however, economic slowdown and political turmoil in several countries along with trade tensions cast some doubt on the future of global markets.
“While we are clearly in the late cycle, reliable leading indicators do not yet point to the risk of an imminent downturn, and 2019 global economic growth should still surpass that of the post-financial crisis average. We think this suggests earnings and share values have room to advance,” RBC Wealth claimed.
Nonetheless, equity returns in 2019 could be modest and uneven, the report suggests. That is one of the reasons why financial professionals should start “reducing exposure to credit risk”.
According to the report, the greatest short-term opportunity in terms of investment is offered by infrastructure. The rising demand for new builds especially in the world’s two largest economies – namely the US and China – has the possibility to play a greater role thane ever in the global economy.
Similarly, the advances in artificial intelligence offer promising transformative opportunities for governments, societies and businesses with the potential to largely increase global wealth. Therefore, its impact in investment must be considered, instead of treating it as a distant opportunity, the report claims.
