Manulife Investment Management released its 2020 Global Macro Outlook this week, which suggests that global economic growth should stabilize in the first six months of 2020, before accelerating in the second half of the year. The report looks closely at a number of countries and regions around the world, including Hong Kong and Singapore, India and Indonesia, China, the United States, Europe, Asia and Canada.

U.S.-China trade relations will continue to be a key market focus in the coming year. The report’s authors also say fiscal spending will increasingly replace monetary policy as the tool of choice used by policymakers to revive global growth. “We expect the shift toward fiscal stimulus to become more evident as we head further into 2020, and for its positive impact to become gradually visible toward the second half of the year.”

Walking a tightrope

In Canada, they add, “the Bank of Canada will have to continue to walk a tightrope in 2020. Growth is slowing – the central bank needs to strike a balance between inflation that’s in line with its target, and its instinct to avoid stimulating an already highly leveraged economy. If Canada does see improved growth, it’ll likely come through business investment.”

Manulife says it expects the Bank of Canada will likely cut interest rates twice in the second half of 2020 as growth slows. Monetary policy is one primary focus of the report. Its authors say extraordinary monetary policy accommodation, around the world, is here to stay for some time.

Business confidence

Business confidence, meanwhile, is expected to “mildly reaccelerate” in 2020, helping to lift the manufacturing sector back into expansionary territory on a sustained basis, particularly in Europe and the U.S.  Overall, however, Manulife warns that global activity could disappoint in the first half of the year, “particularly as China, the primary engine of global trade, remains weak.”

“While we have a more optimistic outlook for global growth in 2020, we note that it won’t occur immediately or uniformly,” they add. “We expect the rebound to take place first in Europe, followed by the United States, and, finally, in China.”