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The U.S. powered ahead of sluggish economies this year, but it may be a case of slow and steady wins the race in the coming year.

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South of the border, “reasons for [that] strength will fade as we get into the first half of 2019,” said Luc de la Durantaye, head of asset allocation and currency management at CIBC Asset Management, in an early October interview.

The U.S. economy grew 4.2% in the second quarter—its best quarterly performance in nearly four years. However, de la Durantaye said, “The fiscal impulse in the U.S. from the tax cuts are going to fade. You’re also going to face, in the first half of 2019, cumulative interest rate hikes from the Federal Reserve, which should dampen a little of the consumer growth in the U.S.”

The IMF forecasts the U.S. will grow 2.5% next year, down from 2.9% this year. For the same period, the organization predicts Canada’s growth will slow to 2% from 2.1%, while both global and emerging market expansion will remain at 3.7% and 4.7%, respectively.

As both the U.S. and other major economies decelerate, that’s “where the U.S. will re-synchronize with global activity,” said de la Durantaye who manages the Renaissance Optimal Inflation Opportunities Portfolio.

Still, as the global economy chugs along over the next 12-18 months, the current cycle of economic growth is set to become the longest in history, de la Durantaye said.

But don’t be alarmed. “We don’t see the excesses that [are] associated with a long expansion, as we saw in 2008, for example, with the real estate market bubble in U.S. or with the stock market bubble,” he added. “We don’t see major excesses in the world economy for now.”

Monitoring risks

Despite a neutral global economic outlook, de la Durantaye said there are still risks to consider. Investors should brace themselves for ongoing trade tension between the U.S. and China, for example.

Read: Commercial real estate shines amid U.S.-China tensions

Other risks include how fiscal spending in the European Union in the near term could affect the EU’s overall debt-to-GDP ratio. Fiscal mismanagement “could create nervousness in the financial market, at least with Europe,” de la Durantaye forecast.

This week, the EU has been in a battle with Italy over whether the EU has control over a member state’s budget, The Associated Press reported. Italy, one of the union’s biggest economies, has the second-highest debt load in the region after Greece, but still plans to sharply increase spending and have a deficit-to-GDP ratio of 2.4% in 2019. Already, Italy’s debt is more than 130% of GDP and, as such, more than twice the EU limit of 60%.

Another potential risk to the global economy is higher oil prices due to geopolitical tensions and lack of spare capacity, de la Durantaye said, though he was interviewed before WTI and Brent Crude both fell from early October highs.

After dipping on Tuesday, oil prices started to regain ground on Wednesday. They fell due to overall market weakness but also as a result of Saudi Arabia saying it would produce what it needs to meet global demand. Both WTI and Brent Crude have slipped approximately US$10 from the near four-year highs they hit at the beginning of the month.

At the time of his interview, de la Durantaye said Iranian oil exports are expected to fall when the U.S. reimposes sanctions against the country in November. His view was that could cause “a strengthening of oil prices, which could become [an] attack on consumer consumption. That could bring a more pronounced slowdown in the global economy.”

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