World economy: cyclical divergence and structural fragmentation are major risks, but not central scenarios

The global economy is shifting from synchronized recovery to cyclical divergence as political risks threaten economic and financial fragmentation along geopolitical fault lines.

Nov 29, 2018 | Arnab Das

In this article from our latest edition of Risk & Reward, we assess the current state of the world economy and analyze in greater detail the possibility and implications of a US dollar/interest rate shock,  as well as the risks of greater protectionism, in each case from a historical perspective. Risks clearly exist, but an extremely negative outcome is not our central scenario. Nevertheless, the era of extremely low volatility and synchronous growth seems to be over. Investors thus might want to engage in tactically defensive relative value strategies.

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