World Growth Estimates

Here's the IMF's latest estimates of world economic growth for 2019 and 2020.  What these numbers show is growth that is remarkably constant for the next two years, somewhere between 3.5 and 3.6%. I'm putting these up because if almost everyday you can pick up a paper or watch the business news and everybody is screaming recession.  Well these numbers don't look like a recession to me.  These numbers smack of stability.  At one time we'd call these Goldilocks numbers.  That is these would show a world economy neither growing to fast too be overheated or too slow so we're worrying about a recession.  True, you can find in these numbers some parts of the world that are doing better than others and it is possible that any single country or region could fall into a recession but that is the case at any given period.  There will always be an outlier.  But that shouldn't take away from the overall picture which is showing slow but stable growth for the next two years.

Now the best argument to these numbers is that the IMF is being too optimistic and there is that possibility.  Things can change and predicting the future is hard.  However, current economic stats are more supportive of what the IMF is showing than what the more pessimistic pundits are predicting.  Right now I'll side with the IMF until the data tells me otherwise.

And one last thing.  If these numbers are even close to correct then probability would suggest that stocks are undervalued on a longer-term basis.  Maybe not so much in the near term as we are overbought, but one can make a positive argument for equities when looking at these numbers on a 18-24 month basis.

I have to be out early next week.  Will post here next Tuesday, Wednesday and Thursday.

Link:  Capitalspectator.com: Macro Briefing-22 January 2019