News Column

Northern Trust's 5-Year Capital Markets Outlook: 'Enduring and Maturing' Global Growth

August 23, 2014



By a News Reporter-Staff News Editor at Investment Weekly News -- Global economic expansion should continue at a slow, steady pace over the next five years, with interest rates rising only gradually and stocks returning 7 to 9 percent per year over the period, according to Northern Trust's annual long-term forecast for the economy and capital markets.

Along with "Enduring and Maturing Global Growth," key themes of the five-year outlook include a continuing search for yield and a new era of heightened geopolitical risk counterbalanced by the increased globalization of financial markets.

"The sub-par growth trajectory since the 2008 global financial crisis has prevented excesses in developed market real economies and required central banks to continue monetary policies that have supported equity market valuations," Northern Trust Chief Investment Strategist Jim McDonald said. "Meanwhile, emerging markets continue to adjust to a maturing growth profile, which weighs on global growth but also reduces inflationary pressures. Effectively, the mediocrity of the current expansion increases its expected longevity."

Each year, Northern Trust'sCapital Market Assumptions Working Group, composed of senior investment professionals from across the global organization, develops a long-term forecast for economic activity and financial market returns that is designed to be "forward looking and historically aware." The group also identifies specific risks that are combined with other portfolio construction tools to annually review and update the firm's recommended strategic asset allocations.

Keywords for this news article include: Northern Trust, Investment and Finance.

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Source: Investment Weekly News


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