Geopolitical risks likely to remain speedbumps through 2019 on global economic growth, says OCBC Bank

Geopolitical risks are expected to remain speedbumps throughout this year in the way of global economic growth, with the United States potentially running out of steam in 2020, according to the latest research report from OCBC Bank.

As it turns out, the US midterm elections in November 2018 saw the loss of the House of Representatives to the Democrats, but as at this juncture, barring more investigations into President Trump, there has not been any material impact on its economic and foreign policy yet.

Some of the risk events in 2019 to take note of include upcoming general elections in Thailand and Indonesia, and changes in central bank leadership for the ECB for instance.

With US President Donald Trump’s continued criticism of the FOMC’s rate hike intentions and Powell’s leadership, a potential change in the Fed chairmanship is also not fully out of the arena of imagination down the road (albeit it is not the baseline scenario for now), whether it’s Powell throwing in the towel (aka Mattis-style resignation) or an actual replacement.

As the FOMC contemplates a pause near the broad range of neutral interest rates, data monitoring becomes even more critical. This could contribute to a rapidly evolving market view of data dependency and what constitutes neutral for them. Given that the global investor climate has turned decidedly more cautious, it appears that tactical trades would be more opportunistic and likely more short-term in nature. Clear directional trades and outsized returns may become more elusive, the report added.