Charles Himmelberg: Global growth to pick up

published 9 December 2016

Goldman Sachs has released its predictions for 2017. The investment bank's chief credit strategist, Charles Himmelberg, believes that "economic growth will likely pick up versus the somewhat disappointing performance in 2016". Indeed, in recent months, "the growth rate of global GDP already appears to be realising at the top of the range".

He also thinks that president-elect Donald Trump "will take a far more practical approach to US trade policy" than his rhetoric suggests, while a promised fiscal stimulus in the US would provide "a welcome growth and reationary impulse".

On the monetary side, central banks will begin to focus on cutting "the cost of short-term bank credit", helping firms. As a result, Goldman expects "ination to gain momentum in 2017". And if concerns about US protectionism are "overdone" and Trump's fiscal policies result in "stronger US growth and ination alongside commodity price increases", emerging market assets "can prosper, especially equities".

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Indeed, many emerging economies now "have stronger external balances... better valuations and more encouraging signs of an improving growth outlook" than they did earlier this year.

If that all sounds like a bit of a "Goldilocks" investment scenario (not too hot, not too cold, but just right) Himmelberg does acknowledge that there are still big downside risks. Trump is "highly unconventional and unpredictable" compared with a more typical president for a start, while "valuation levels for equities and especially bonds remain highly elevated". As a result, "expected returns remain low", with US stocks seen returning only 2.7% next year.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri