The global economy has experienced an unusual, volatile recovery over the last few years.
If you look at the VIX, you’ll see that market sentiment has fluctuated rapidly over that time period, says Jean Boivin, deputy chief investment strategist for Blackrock Investment Institute. He offered his views on the global economy at a Economic Club of Canada event.
The current level of volatility in markets is due, in part, to the continued crisis in Europe, he adds. Also, to muted growth in China and other emerging markets.
On the upside, Canada ranks highest in performance for productivity out of the G7 countries, he notes. That’s the case even though investors perceive our country’s productivity to be lower.
Here are some additional articles on the global economy.
Live tweets from Economic Club of Canada’s global outlook event
Nobody can say what might happen, but the global economy is in search of an anchor. #BlackRockglobaloutlook
Many are still looking at Europe and its evolving crisis, and at China and emerging markets, says Boivin #BlackRockglobaloutlook But, as has been China’s approach this year, it will continue to push for domestic growth.
Another puzzle is long-term interest rates; it’s difficult to predict rate trends over next five years, says Boivin. #BlackRockglobaloutlook
But this recovery was supposed to be unusual, says Boivin. Upside is we’ve seen 3rd-longest #bullmarket and strong financial markets.
Over the next 5 to 10 years, indicators such as productivity levels should be key, adds Boivin. And, we need to monitor currency wars and their effect on global growth, trends over the next several years. #BlackRockglobaloutlook
Also consider that there’s more uncertainty and volatility in markets, says Boivin. So prepare clients. For more, read: Markets to exhibit greater volatility: IIAC
Much of today’s global economic strength is due to QE and central bank policies, adds Boivin #BlackRockglobaloutlook But, the problem is there’s too much reliance on and attention paid to monetary policy these days. @ECofCanada
You must consider that the role of central banks is changing in this time of uncertainty, and that’s affecting sentiment #BlackRockglobaloutlook. Boivin suggests that to help markets, central banks need to speak with more conviction. Being overly dovish can show a lack of confidence in the #economy.
Going forward, he adds, it’s key for you and clients to look at hard economic data and to avoid over-reaction, Boivin adds. #BlackRockglobaloutlook
With the easing that has been occurring, for example, you might wonder why inflation hasn’t been exceeding targets? That’s partly due to weak commodities, says Boivin. #BlackRockglobaloutlook
He concludes that being near 0% interest rates isn’t as big an emergency as people may think. It’s still possible to boost the #economy from that position. When the Fed raises rates, it’s important to remember that the move will impact people’s search for yield. So watch that trend. #BlackRockglobaloutlook