We believe the global economy will continue to bounce around the current growth pace. Trade, manufacturing, and oil, along with geopolitical risks, will play a role in determining the trajectory. The dramatic drone strike that killed Iranian general Qassem Soleimani in January propelled the United States and Iran to the brink of war (and back) and roiled financial markets. The standoff between President Trump and Iran’s supreme leader Ayatollah Ali Khamenei also caused fluctuations in the volatile oil markets. Crude prices surged after the attack in anticipation of a response from Iran that would disrupt Middle East oil flows.
Slow growth continues to exert pressure on the eurozone’s politics. Spain has a precarious, new coalition made up of center-left and hard-left parties after Prime Minister Pedro Sánchez broke nine months of gridlock in forming a government. Britain will leave the European Union on January 31 three-and-a-half years after the Brexit referendum. There will be a transition period until the end of 2020. And China’s policymakers have sanctioned more measures, including a new loan prime-rate system, in response to economic malaise.