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Slow growth again next year at 2.5%: Schroders

Friday, November 20, 2015 - 15:11

THE world will continue to grow slowly in 2016, said Schroders chief economist Keith Wade, who is calling for a 2.5 per cent global gross domestic product (GDP) growth in 2016, downgraded from 2.9 per cent earlier.

The lower forecast is driven in part by slower US growth due to a stronger dollar. Meanwhile, economies around the world continue to refrain from borrowing and spending after the trauma of the global financial crisis in 2008-09, Mr Wade said.

"It might take another four to five years, with people saying, my balance sheet is mended now, and will go out there and borrow again," he said.

Mr Wade was speaking at an annual media conference in London organised by Schroders, a UK fund manager which is seeing more Asian institutional money inflows this year.

At the conference, fund managers said stocks are still attractive relative to bonds, though they are looking expensive in some areas like US stocks.

Richard Sennitt, who manages Schroders' Asian Income fund, said he has been buying Asian companies in the materials and consumer discretionary sectors.

Karl Dasher, US country head and co-head of fixed income, said he is finding US high yield bonds attractive.

He noted there was rising demand from Japanese investors eager to escape low yields back home.

Matthew Michael, commodities product manager, said that energy is looking the most interesting, given capital expenditure cuts by oil majors and rising demand as the US economy recovers.

China takes up just 14 per cent of the world's oil consumption, compared to 40-50 per cent of the world's pork, copper and coal consumption, he said.

"So you can start there, look for commodities that are cheap, those that have already fallen in price, and are not sensitive to weaker Chinese demand."

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