We see stable global growth with room to run...Setting the scene: the eurozone is enjoying its fastest economic expansion since 2011. EM (Emerging Markets) growth looks self-sustaining, even if powerhouse China slows more than markets currently expect. The breadth of the global recovery has expanded: Manufacturing figures are up in about 80% of countries, a share that has steadily increased over the past year. And U.S. tax cuts could provide a decent dose of fiscal stimulus.
The caveat? Consensus expectations have mostly caught up with our GPS for G7 economies over the past year. See the "More growth, less upside" chart on page 3. This suggests less investor drive to play catch-up and embrace the positive growth outlook. Overall, we see very steady growth, coupled with still subdued inflation and low interest rates, as positive for risk assets — but with returns more muted. We expect global economic growth to chug along in 2018, but see less room for upside surprises to lift markets.