Macro uncertainty on the rise

Mar 23, 2018

We see greater economic uncertainty ahead. Hefty U.S. fiscal stimulus and the risk of trade wars create a wider array of potential outcomes – both positive and negative – with implications for
financial risk premia.


  • The one-way opening up of global trade is under threat. We find important linkages between major economy investment trends and export growth in emerging markets.
  • The influence of trade on global growth goes beyond the physical exchange of goods and services. Sentiment and confidence play an outsize role creating stronger economic linkages. The confidence channel tied to trade also serves as the conduit for shocks to spread across countries.
  • Confidence manifests itself in the safety premium we have described in core government bonds – with implications for the term premium and the U.S. dollar. The USD’s recent behaviour seems dominated by broad risk appetite.


The Much in common chart below shows how much of the co-movement of 18 of the largest DM and EM economy growth rates can be explained by a common global factor rather than a country-specific one. For many countries, the common factor influence has increased remarkably to explain 60-80% of GDP growth shifts.

Chart: Common factor influence on country GDP, 1987-2017
Jean Boivin
Head of Economic and Markets Research, BlackRock Investment Institute
Jean Boivin, PhD, Managing Director is Head of Economic and Markets Research at the Blackrock Investment Institute, a global platform which leverages ...
Isabelle Mateos y Lago
Global Macro Strategist, BlackRock Investment Institute
Isabelle Mateos y Lago, Managing Director, is BlackRock's Chief Multi-Asset Strategist. As part of the BlackRock Investment Institute (BII), she is responsible ...