March, a pivotal month for the World Economy: report

The year started on a rocky note and how events play out will dictate investor sentiment.

March will be unfolding events that will offer clarity on a US-China trade deal, Britain’s fate within the EU and any signs that China’s economy is turning around, a Bloomberg report published in the media said. 

Further, US President Donald Trump is mulling a report that may lead him to place tariffs on European and Japanese cars. The Federal Reserve, European Central Bank and Bank of Japan will also be deciding policy, media reported.

In mid-March, the US is looking at a summit between Trump and his Chinese counterpart, President Xi Jinping, which has been hailed as a potentially "historic deal" by White House economic adviser Larry Kudlow. However, even if an agreement is reached, the relief may prove short-lived if Britain crashes out of the EU on March 29 without a divorce deal, compounding a broader slowdown across the region, the report said.

In March, China’s annual National People’s Congress will sign off on the government’s economic plan for the year and  announce the annual growth target among other things, with some economists expecting China to set a lower growth target of either about 6 per cent, or from 6 to 6.5 per cent – down from around 6.5 per cent for the past two years, the report said.

March will also witness the release of key Chinese data which will show whether or not the world’s second-largest economy is responding to policy easing after months of stimulus, the report said.

The year started on a rocky note and how events play out will dictate investor sentiment. The International Monetary Fund in January cut its forecast for the world economy, predicting it will grow at the weakest pace in three years in 2019, the report said.

According to Bloomberg Economics, risks were evident in fourth-quarter data showing the US economy was steadier than thought, growing by 2.9 per cent annualized, though a buildup of inventories means the outlook is far from certain, .

"The economy appears to have dodged a bullet at year-end – but the coast is not clear," Bloomberg US economists led by Carl Riccadonna wrote in a note.

While Goldman Sachs Group Inc. Chief Economist Jan Hatzius believes the global economy may have already bottomed out, the risk to Goldman’s global GDP forecast of 3.5 per cent for 2019 remains to the downside, the report noted.

"The coming weeks may bring more clarity over Brexit, U.S. tariff threats to EU auto producers and whether Beijing is succeeding in re-stimulating China’s growth," said Sarah Hewin, chief economist for Europe and Americas at Standard Chartered Bank. "A benign outcome in each case could improve the outlook for exporters and broader business sentiment,” the report said.

Source: ET/media reports

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