Reflation is…

Reflation, or a return to economic growth, brings many new investment opportunities but may also create challenges for portfolios, particularly income generating assets. But if you can get your reaction right, not only can you protect your portfolio but you can also benefit by allocating to assets that will outperform in this new environment.

Reflation is a global return to growth…

Real GDP Growth, %

Real GDP Growth

*Projections
Source: IMF, World Economic Outlook, April 2017
For illustrative purpose only. There is no guarantee that any forecasts made will come to pass.

…and businesses feel confident it will continue

OECD Business Confidence Index, Jan 2015-March 2017

OECD Business Confidence Index

Source: OECD, as of June 2017

Synchronised and sustained economic expansion

Reflation is a virtuous cycle. Wage rises boost consumer spending; this leads to price increases that feed into higher profits, giving businesses the confidence to invest, leading to steady global economic expansion. It all creates a self-sustaining recovery.

Recent economic indicators supports a steady and sustained global economic expansion. Business confidence are up in many markets around the world and we see further upside to growth forecasts for key developed economies. That gives us confidence that global growth is both resilient and synchronised.

Most importantly, the growth momentum in the developed world is spreading and is supporting a rebound in emerging markets – notably Asia.

Risks still exist, of course. But it is important to focus on the opportunities this shift can provide across the longer term in Asia and globally.

Emerging markets will still drive
global growth…

Contribution to Global Growth, %

Emerging markets

*Projections
Source: IMF, World Economic Outlook, April 2017
For illustrative purpose only. There is no guarantee that any forecasts made will come to pass.