Our medium-term baseline scenario is that of a late business cycle slowdown supported by the dovish U-turn of central banks. We expect economic growth to move below potential for most developed economies in 2020, a trend that will be further exacerbated in 2021 by a deteriorating cyclical environment and still anaemic global trade. Nevertheless, growth is expected to stay in positive territory.
In the developed economies, central banks are expected to cut their policy rates to mitigate the economic slowdown. The ECB has moved to an unconventional monetary policy that will protract long into the future.
